Scrutinizing Investment Opportunities - Bricks and Mortar
REMAX Canada has recently published a report that analyzes the last 30 years in the Canadian housing market. Investing in bricks and mortar has been shown to be one of the safest approaches to invest over this span of time.
The Regional Executive Vice President, Elton Ash declares in the report that housing analysts are still taken by surprise at the strength of the residential housing market. There have been three great downturns in the Canadian housing market over the last 30 years, two of them were in the 1980’s and the most recent in 2008. Values and sales have been growing up for 6 months making the downturn in 2008 the shortest one ever. The housing market has now swung into a leverage market (debt) and quite probably a sellers market as well.
Long term soundness of real estate investments is based on numerous factors in Canadians traditional belief in houses and condos. Canadian investors see the real estate market as both a monetary and material asset. From 1981 to the present day there has been an elevation of over 6% in property ownership. In some regions it is larger than that, for example, Calgary 74.1%.
Slumps in the real estate market have already been revealed, but even taking these into account, property investment is still a market that is growing in value. In the first eight months of the year Greater Vancouver has seen an a growth of 14% sales and is the authority in this years real estate market. The major buyers are shown by first-entry purchasers, however the over $1 million segment is also being galvanized by trade-up buyers.
Anyone that has been keeping tabs on the real estate market will know that the largest price increases are in Vancouver.
Since 1980, the average price of property in Vancouver increased by 473.7% while the average price in Canada reached 366.4%, from $100,065 to $574,061. Home ownership rose from 58.5% to 65.1% during almost the corresponding period (since 1981). There is a colossal difference if you observe inflation over the corresponding period of time. Looking at the Bank of Canada inflation calculator, it reached 156.6% for the corresponding period. In other words: investing $100,000 into real estate 30 years ago would afford you just about $320,000 net return.
It may come as a surprise but it seems that Canadians were already alert to this. According to The Angus Reid Omnibus Survey (handled on September 15), 77% of respondents in Canada preferred investing in real estate instead of stocks.
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