Toronto House Price Trends over the past 50 years

Is buying a home a GOOD INVESTMENT?

The chart below shows average Single Family Home Prices over the past 50 years.

Looking back allows some remarkable observations:

The average Single Family Home has increased from $14,424 in 1953 to over $376,000 in 2007. That is an average of about 6.2% compounded annually, TAX FREE for most owners!
The growth rate has been accelerating in recent years, as shown by the trend line. Since 1996, the average home has increased by 6.9% compounded annually!
There has only been one major "correction" to house prices in the past 50 years. Many will recall the "heady" late 80's when house prices escalated at extraordinary rates, until the bubble finally burst in 1991/1992. This correction was largely attributable to inflated prices being caused by widespread speculation by both domestic and foreign investors, without regard for sound underlying economic considerations.
Since 1996, house prices have again steadily increased, driven by solid demand for housing due to a strong economy largely stimulated by low interest rates and steady immigration into the GTA and less by wreckless speculative demand.

Some may argue that the bubble is about to burst, but more experts seem to think that growth will continue to be steady over the next few years, given the strong Canadian and local economies, the steady rate of immigration into the GTA (about 75,000 + annually) and a favorable investment climate. Canada remains one of the most stable and attractive places for foreign investment.

Whether there is a small correction, or even if the bubble should "deflate" somewhat, a home investment still represents a sound investment as it is functional (gives you a place to live!), free of tax on capital gains, and should continue to provide a very favourable and continued LONG TERM growth with strong underlying security.

Call or email us for an excellent article which appeared in Canadian Business entitled "BUBBLE? WHAT BUBBLE?" This article outlines a major study completed by Merrill Lynch Canada which provides a strong argument that a "Bubble" as occurred in the early 90's is not a likely event in the forseeable future, and "the current Canadian housing boom is building on solid fundamentals."

If you are renting, or considering moving up, let us show you how a relatively small downpayment investment can, through the process of LEVERAGE, allow you to enjoy a return on your investment which can be as much as 20 - 35% per year, TAX FREE, for many home owners. Take advantage of today's attractive interest rates to leverage your money while enjoying home ownership.

Please call if you would like any further information.

John Stevenson, P.ENG., M.B.A

Direct 416.233.8657