Scrutinizing Investment Choices – Bricks and Mortar
Posted by Foreclosure Prevention in FinanceThe Canadian housing market over the last 30 years has been subject to a report by REMAX Canada in acknowledgement to the most recent recession. The conclusion of the report is simple – bricks and mortar have been one of the safest ways of investing in Canada over the past three decades.
“The fortitude of the residential property sector cross-country has taken lots of economists and housing analysts by amazement once again,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. In 1981, 1989 and 2008 there were big declines in the real estate market. Costs and sales have been growing up for 6 months making the downturn in 2008 the shortest one ever. Buyers have lost their market, which has now turned into leveraged or even a sellers’ area.
There are numerous reasons why there is a long term investment in the Canadian property market. Real estate represents fiscal and material “fortresses” for a lot of Canadian investors. From 1981 to the present day there has been a raise of over 6% in house ownership. In some areas it is larger than that, for example, Calgary 74.1%.
Regardless of the above mentioned downturns and smaller variations, real estate remained a very well appreciating investment, with Vancouver, Victoria and Toronto as forerunners in terms of price appreciation. This years largest growth in the real estate market comes from the Greater Vancouver area with a massive 14% increase. The main buyers are depicted by first-entry purchasers, however the over $1 million segment is also being accelerated by trade-up buyers.
Anyone that has been keeping tabs on the real estate market will know that the biggest price increases are in Vancouver.
Since 1980, the average price of property in Vancouver grew by 473.7% while the average price in Canada reached 366.4%, from $100,065 to $574,061. For the same period of time the amount of people owning their own home has grown nearly 10%. There is a gigantic difference if you observe inflation over the same period of time. Looking at the Bank of Canada inflation calculator, it attained 156.6% for the corresponding period. On an approximation you would see over a $300,000 net return on a real estate investment of $100,000 bought 30 years ago.
It seems that Canadians are aware of this actuality. In a very up to date Survey by The Angus Reid Omnibus, nearly 80% of respondents put real estate investment over stock investment.
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