The Wealthy Renter: How to Choose Housing That Will Make You Rich by Alex Avery

Author:Alex Avery [Avery, Alex]
Language: eng
Format: epub
Publisher: Dundurn
Published: 2016-09-10T04:00:00+00:00

It is true that Canadian house prices, and those in many other countries, have generally increased over long periods of time.

That makes a lot of sense to me. After all, a house is made up of materials, like wood, concrete, copper pipes, steel, and bricks. To put those materials together to make a house requires labour, and both materials and labour tend to go up in price over time. So, the cost to build a house goes up over time. This fact, combined with any amount of population growth, means that as new houses are required, the cost of building new houses will rise as well.

But has the house price appreciation shown above delivered good investment returns?

The first thing we can look at is the price appreciation of Canadian homes compared to the S&P/TSX Composite Index, which is the broadest group of Canadian companies you can purchase through a single investment on the Toronto Stock Exchange (via low-cost Exchange Traded Funds, most simply). There are about 235 companies included in the index: Canadian banks, railway companies, energy companies, pipelines and utilities, cable and telecommunications companies, mining companies, grocers, technology companies, real estate trusts and companies, and healthcare companies.

Source: CREA, Bloomberg.

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