As a young professional living in Toronto, I often am asked the question, “when do you plan on buying a home?” The average price of detached homes in Toronto increased by 20.7 percent in one year. The inventory of unsold condo is decade low with only 6.8 months of supply. The demand for Toronto's residential real estate only seems rising. My best friend purchased his first condo and my wife keeps nagging me to purchase a condo as the price rises. Yet despite such compelling forces, my answer is always, “not anytime soon.” Why? Because I believe it makes more sense to continue investing in stocks for the time being. Here are my reasons for my strong conviction.

Reason 1: Unattractive Valuations (Long Payback Period)

As discussed in my article, Understanding Payback Period, payback period is an important concept for value investors and I generally require my investments to have a payback period of less than 10 years. Unfortunately, the payback periods of condos sold in Downtown Toronto are generally around 20-30 years.

For example, for a 500-599 ft^2 1 bedroom property at ICE Condominiums in Harbor Front, rent is currently listed at $1, 750 while the purchase price is listed at $435, 000.