By Penelope Graham

It’s commonly touted that buying a home is the largest financial investment that many Canadians will ever make – and aside from merely providing a roof over one’s head, owning a property offers an effective and safe way to grow your money over a long-term horizon.

That homeownership is a savvy investment choice is certainly a favoured selling point for many agents, and is a generally agreed-upon sentiment among those already in the market. According to a recent survey conducted by Zoocasa.com, 68 per cent of Canadians who’ve owned their home 10 years or longer felt it was a good financial move.



That long-term homeowners have seen exponential growth in their initial investment, especially following the boom times experienced in 2016 and the first half of 2017, is accurate in most of Canada’s major urban centres.

However, as the national housing market finished the year on a historical low – sales clocked in 12 per cent below the 10-year average, reports CREA’s December report, with the national home price softening by 4.9 per cent year over year – is investing in real estate still a fail-safe financial option?

To assess whether this is the case, Zoocasa crunched the numbers in three key housing markets, comparing the monthly trajectory of the local average home price to the performance of three popular investments over the course of 2018:

  • A high-interest savings account (+1.1 per cent y-o-y)
  • The S&P / TSX Composite Index (-11.6 per cent y-o-y)
  • The S&P Canada Aggregate Bond Index (+1.5 per cent y-o-y)

The findings reveal that purchasing a home in each market would have yielded a better return than investing in the S&P / TSX Composite Index, which finished a tumultuous year with an 11.6 per cent loss. However, only one market – the Greater Toronto Area – outperformed the bond market, while neither Calgary nor Greater Vancouver had the price growth to challenge even that of a high-interest savings account.

A lot of this variation can be attributed to the unique combination of provincial and federal policies that hit markets last year. While buyers across the country had to grapple with tougher mortgage rules, B.C. markets encountered new anti-speculation and empty-homes taxes, while Alberta remains hard hit by a downturn in the oil patch.

6 COMMENTS

  1. I’m confused – aren’t we missing a big chunk of the costs associated with real property ownership even as principal residence, even given the benefits mentioned by Chris Staeger above? Namely, how does someone interested in owning a piece of RE property account for unpredictable maintenance expenses? What about property taxes? Curious how do you compare RE assets to stocks and TFSAs so it’s apples to apples?

  2. You have to remember home ownership is
    capital gains tax free. It’s also a place were
    families invest in raising their family.
    Intangible values. Anyone who compares
    those critical elements to the stock market or any other investment vehicle just doesn’t get it . It’s a silly comparison.

  3. What a terrible analogy. This comparison provides zero useful information for anyone. To even try and compare home ownership to investing in money markets shouts out , ” I have nothing of interest or value to offer readers.” If real estate values drop a home owner still maintains a tangible asset. If the stock market drops that money is gone and an investor is left with nothing. There is no accounting of equity built up in a property which this past year would offset any slight decrease in national values. Nor the fact that a primary residence is a tax free capital gain and gains made investing in money markets is not tax free. And to use a twelve month period of time for any significant asset appreciation for any type of investment is remedial. Can’t wait to see the ” Powerful online tools.”

    It is fascinating to see how people are attempting to use technology to provide solutions to problems that do not exist.

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