Are Bricks and Mortar a Solid Investment Option?
Posted by Foreclosure Prevention in FinanceAs an observation to the most recent recession in the housing market in Canada, REMAX Canada wrote a report analyzing the local Canadian housing markets over the last 30 years. Over this period of time the report derives that investment in bricks and mortar has always been one of the best and most protected option.
The market for residential real estate throughout Canada still amazed economists and real estate analysts according to the report. There have been three great declines in the Canadian real estate market over the last 30 years, two of them were in the 1980′s and the most recent in 2008. Prices and sales have been growing up for 6 months making the decline in 2008 the shortest one ever. The real estate market no longer favors the buyer, more people are using leverage to finance real estate investment.
Long term soundness of real estate investments is based on numerous factors in Canadians traditional belief in houses and condos. Canadian investors see the housing market as both a fiscal and material asset. Over the last three decades there has been a considerable increase in the purchase of properties of over 6%. With a 12% rise, Calgary has observed an even larger increase in property purchase.
Slumps in the housing market have already been mentioned, but even taking these into scrutiny, property investment is still a market that is rising in value. In the first eight months of the year Greater Vancouver has seen an a rise of 14% sales and is the pioneer in this years housing market. Acceleration is coming from those buyers that are trading up but the most meaningful rise is by the first time buyer.
Vancouver is classified the greatest performing market in the whole of Canada for real estate price increases.
In Vancouver housing prices have risen nearly 500% in relation to just over 350% for the rest of Canada since 1980. For the same period of time the amount of Canadians owning their own home has increased nearly 10%. If you look at the rate of inflation over the same time frame you can see the contrast. Over the corresponding period there was a 156.6% increase in inflation using the Bank of Canada calculator. In other words: investing $100,000 into real estate 30 years ago would bring you almost $320,000 net return.
It may come as a surprise but it seems that Canadians were already aware of this. According to The Angus Reid Omnibus Survey (administered on September 15), 77% of participants in Canada settled upon investing in real estate instead of stocks.
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