Home Ownership as an Investment

Don’t disagree.

I am mostly talking about buying homes “as an investment”.

RE is very cyclical and in many cases it comes down to timing (luck really)

In Canada, the last few years saw an explosion in RE prices, but that was unique.

The market now is fully saturated and those gains will not be replicated going forwards given the financial and political realities on the ground.

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I’m not doing this again. I’ve already made my case, feel free to read the entire thread. I think I made a good case that real estate has been a superior investment. Feel free to disagree.

You should also think like an actuary and understand that evaluating the performance of two assets is not just about looking at returns over a certain period. You need to look at the volatility as well.

For someone with a mortgage, the returns to real estate have been very high and less volatile than the stock market.

That’s the final word from me! lol.

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You are the biggest troll in the world

https://ca.rbcwealthmanagement.com/documents/1529693/0/Stock+market+vs+Real+estate.pdf/4c3bedd3-200e-4d73-955b-87c0599fabd7

That’s just price appreciation. That is not how you calculate the actual return on investment.

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Yea. You take things like taxes, insurance, transaction costs, and maintainable into account

Sure picking one real estate market that has done really well yes, it probably has out performed the stock market, but that’s like picking a stock that’s done really well the past 10 years and saying it’s way better than real estate.

That’s because BBB is claiming that real estate has underperformed the market everywhere.

So you agree that your argument is that real estate outperforms the stock market somewhere but not in most places? I mean, that’s as weak (in argumentative sense) as a statement can get, but I’m sure BBB will grant you that one.

We should look at crypto while we’re at it. Nothing outperforms that. And you don’t even need leverage. $500 will make you a billionaire.

I’m not making the case that real estate is better or has been better than the stock market. It’s BBB that’s trying to convince me that real estate is never a good investment, which is factually incorrect given the historical returns to real estate in the Toronto and Vancouver markets. That’s all I am saying here.

In your horrendous math problem you suggest the Canadian housing market returns 22% over a very cherrypicked 5 year period

Okay. Now what did the sp500 returned over that same timeframe

Roughly the same 20% from 2010-2015. Now take transaction costs and admin expenses into account

Okay. Point made

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I’m just out here printing facts…

You also listed a link to a study showing the same facts

Not sure why you keep trying to act like there is some hidden pathway to wealth that you’ve discovered

My exercise gives 22% per year. S&p 500 annual returns:

|2010 |14.82% |
|2011 |2.10% |
|2012 |15.89% |
|2013 |32.15%|
|2014 |13.52% |
|2015 |1.38% |

You know what, you’re right

Sales taxes on homes don’t exists in Canada, nor do agent fees, property taxes, insurance

(People usually set aside an extra 5-10% for closing costs in the US, for both buying and selling)

22% sounds like a lock

Lots of wealthy Canadians browsing the forums eh

Comparing returns seems like a road of no return here. I think we all know that both real estate and aggregate stock indices are not the way to go if you want GREAT returns, especially when one can cherry pick the timeframe for which to calculate the return.

@stochiki Was your initial argument that - given the returns are the same, investing in property is better than investing in the stock market?

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I’m not making the case for real estate at all. I’m just telling BBB that the typical canadian has been better off buyinig instead of renting. I am not sayiing this will continue. This is mostly due to leverage effect.

I think it’s easier to look at it in hindsight. Real estate performance is really a combination of demand and inflation, and demand is maybe an educated guess at best. There is no underlying return mechanics at play.

Leverage juices the return, but its also going to do the same with the “expense ratio” of maintenance, taxes, and insurance.

If you have 200k in your retirement, what’s stopping you from cashing that out tomorrow to buy an additional 1m property?

Buying a home is interesting because you get the benefit of also getting use from the physical asset. Your investment allows you to reduce rent expenses. Maybe you buy more than you need… its nice to get a positive return… and not necessarily a bad idea to have as part of a balanced portfolio, but is think about it in those terms rather than expecting it to continue to outperform long term due to leverage.

Bruh is gonna make me scroll up 150 posts to find his original post. Hang tight folks. I’m going in

The typical Canadian who invested in crypto over the same timeframe is also miles ahead of either buying property or investing in the stock market.

Hindsight is always 20/20.

I guess you and BBB can argue what actually happened historically. But I think we all thought you were recommending investment strategies, which…kinda is the point of the thread.

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This is the face that launched 1,000 ships

(The last sentence in particular)