25-year price gains ‘remarkable,’ says Re/Max
Jan 24, 2007
A new Re/Max study says residential housing values in virtually all major Canadian centres have posted significant gains since 1981. The best place to buy a home 25 years ago was Barrie, Ont., which has seen a 372 per cent increase in average price ($51,665 to $244,000) during the 25-year period, Re/Max says.
Despite the cyclical nature of the business, Re/Max says that in 17 housing markets across the country, price appreciation topped 240 per cent in six other areas, including, St. Catharines (329 per cent), Hamilton-Burlington (325 per cent), Ottawa (297 per cent), Greater Toronto Area (290 per cent), Greater Vancouver Area and Halifax-Dartmouth (242 per cent increase). Victoria reported a 229 per cent increase, London experienced an upswing of 228 per cent, Calgary was up 227 per cent, and Kelowna rounded out the top 10 at 211
per cent.
Nationally, the compounded annual rate of return is 5.3 per cent. The compounded annual rate of return for Barrie is 6.4 per cent. The top seven markets experienced an annual compounded rate of return ranging from five per cent to 6.4 per cent. The worst performing market experienced a 3.6 per cent rate of return.
"Homeownership has always been more of a necessity of life than an investment vehicle," says Michael Polzler, executive vice-president, Re/Max Ontario-Atlantic Canada, in a news release. "The percentage increases that have occurred across the country over the past 25 years show that real estate is also a solid investment."
Nationally, average price appreciated 264 per cent in the 25-year period, rising from $76,021 to an estimated $277,000 in 2006. Although a number of factors contributed to the substantial upswing in values, perhaps the greatest influence was a 25 per cent increase in Canada’s population (which rose from 24,820,393 to a projected 31,021,251 in 2005), says the company.
“The results are nothing short of remarkable, given the economic volatility of the marketplace in the past 25-year period,” says Elton Ash, regional executive vice-president, Re/Max of Western Canada, in the release. “This is especially true in recent years when serious external factors such as 9/11, SARS, and an outbreak of forest fires barely registered on housing activity. Any one of these disasters would have had a significant impact on real estate markets in the 1980s.”
Thanks to economic diversity, today’s housing markets are more insulated than in the past, says Re/Max. It says Alberta’s pro-business stance has served to attract major corporations to the province in recent years, and Saskatchewan’s economic base has shifted from agriculture to natural resources. In Ottawa, an economy once solely dependent on the one major employer in the area, the evolution of high-tech has played a substantial role in the overall health of the residential real estate market, says Re/Max.
“Immigration has also bolstered residential home sales, particularly in Canada’s largest cities,” says Polzler. “Approximately 250,000 new Canadians arrive annually and we know from experience that many will buy a home within five years of immigrating. Job opportunities have also prompted in-migration across the country as purchasers from more rural communities seek employment in major metropolitan areas.”
Baby Boomers have also been a powerful force behind housing demand, says Ash, particularly in the upper end where sales have surged in recent years. “Boomers have demonstrated their buying intentions through the purchase of primary residences, recreational and retirement properties and even in financially assisting their children-the next generation of home buyers-thereby stimulating the first-time segment as well.”
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