Raise the topic of real estate at any gathering this summer and the question as to whether housing values are well founded routinely arises.
Generally, most Canadians feel very positive about the housing market outlook, as reflected in the results of a recently reported Bloomberg Nanos Canadian Confidence Index, a weekly survey that gauges the mood of people from coast to coast. It found that respondents’ views as to the value of housing are the most optimistic since 2008.
From my perspective, the results of this survey are right on the mark. In fact, it’s easy to see how much of a strong long-term investment real estate represents by taking a look back at our city’s history.
The average selling price for July 2014 sales was $550,700 — up by 7.5% compared to July 2013. Looking back 18 years, to July 1996, the average price was $199,856, reflecting an increase of 175%.
While it’s important to note that this isn’t a direct apples to apples comparison — geographic boundaries and the mix of housing types have changed over time — it does illustrate an indisputable truth: a sensible investment in housing provides strong long-term returns.
Reaching even farther back, 48 years, to 1966, the average price for a new home was $22,500. Today, a parking space in a downtown condominium can easily sell for more than the cost of a home in 1966. Coincidentally, the Toronto Real Estate Board’s 1966 President Jack Key shared thoughts that year that could have helped astute buyers predict our city’s condo boom.
“If you take into consideration that there will be an acceleration in growth rate in the next few years, and less than three-quarters of our vacant land is suitable for development, at most we have only five years’ supply of land available within Metro’s boundaries,” Key said.
A Toronto home purchased 78 years ago, in 1936, could have been snapped up for approximately $8,000.
The President of our association that year, James McWilliams, told a local daily newspaper, “There is no shortage (of housing) between $7,000 and $9,000…but a decided lack in the class between $10,000 and $12,000 in the low tax areas.”
Today of course, those “northerly districts” would likely be considered the uptown area of our city’s core and the grandchildren or great grandchildren of a buyer from that era are, in many cases, used to prices closer to one million dollars rather than $10,000.
Like any market, housing will experience cycles in which sales and prices wax and wane, but in the long-term the message is clear: making the move to homeownership, regardless of where you choose to call home in the GTA, has offered extremely favourable results.
In a recent poll conducted by Ipsos Reid on behalf of the Ontario Real Estate Association, 82% of Ontarians agree that real estate is a good investment. And, as I have noted previously, a home is the only investment in which you can live while it appreciates.
Excerpt from: Toronto Sun Homes Real Estate News
By Paul Etherington – President, Toronto Real Estate Board