Reposted from Reddit
This article discusses the consequences trying to enter the housing market in the last few years post COVID.
If you missed the real estate boom post COVID you aren’t the only one. Many are reeling from soaring prices in Toronto, Vancouver and other major cities in Canada. The article “How Canadian millennials can get financial revenge for missing the real estate boom” from the Financial Post suggests focussing on the stock market and renting rather than attempting to buy in to very expensive and competitive markets but does this make sense?
According to the article the stock markets have returned on average 13% over the last ten years but don’t discuss changes in property values, inflation. A diversified portfolio is necessary to weather the ebbs and flows of the economy but ignoring real estate even in markets like Vancouver and Toronto is ignoring potential income as well as the gains from future changes in the market. Real estate whether a primary residence or investment property has several advantages when included in investment strategy. A primary residence is currently exempt from capital gains so can be a lucrative tax free investment. Secondary properties can generate monthly income in addition to increases in property value over time. It is true that in many markets finding affordable properties that are practical for different living situations is difficult. If the primary residence must be rented due to personal needs and market factors consider an investment property as a part of your folio.
The other question is whether real estate will yield comparable returns on investment as investing in the stock market. In the article the return on investment from the stock market is listed as 13% over ten years. In the same time period housing prices went up on average 77% in Canada. 97.8% in the GTA, 68.9% in Vancouver, 32% in Calgary. The lowest 10 year return on investment was in Regina which was 10.3%.
If you missed the real estate boom post COVID you aren’t the only one. Many are reeling from soaring prices in Toronto, Vancouver and other major cities in Canada. The article “How Canadian millennials can get financial revenge for missing the real estate boom” from the Financial Post suggests focussing on the stock market and renting rather than attempting to buy in to very expensive and competitive markets but does this make sense?
According to the article the stock markets have returned on average 13% over the last ten years but don’t discuss changes in property values, inflation. A diversified portfolio is necessary to weather the ebbs and flows of the economy but ignoring real estate even in markets like Vancouver and Toronto is ignoring potential income as well as the gains from future changes in the market. Real estate whether a primary residence or investment property has several advantages when included in investment strategy. A primary residence is currently exempt from capital gains so can be a lucrative tax free investment. Secondary properties can generate monthly income in addition to increases in property value over time. It is true that in many markets finding affordable properties that are practical for different living situations is difficult. If the primary residence must be rented due to personal needs and market factors consider an investment property as a part of your folio.
The other question is whether real estate will yield comparable returns on investment as investing in the stock market. In the article the return on investment from the stock market is listed as 13% over ten years. In the same time period housing prices went up on average 77% in Canada. 97.8% in the GTA, 68.9% in Vancouver, 32% in Calgary. The lowest 10 year return on investment was in Regina which was 10.3%.