President’s Toronto SUN Column: Homeownership Is A Great Investment
Posted by: Toronto Real Estate Admin / Category: Toronto RealtorTREB President’s Column as it appears every Friday in the Toronto Sun’s Resale Homes and Condos section.
July 18, 2014 — As a REALTOR®, I’m often asked for advice regarding the best approach to building a solid financial future.
While investing in the stock market is often seen as a direct route to accumulating wealth, it’s a domain that is not familiar to everyone.
The good news is that even if you find the complexities of the financial markets confounding, homeownership offers a straightforward, and more advantageous alternative to growing your nest egg.
Today, a household earning the average income in the Greater Toronto Area (GTA) can comfortably afford mortgage payments on a Greater Toronto Area (GTA) home. If you’re planning to make the transition to homeownership here in the GTA, you can buy with the confidence that you’re investing wisely in a world city that consistently achieves strong global rankings.
Between June 2004 and June of this year, the value of the SP/TSX Composite Index, which includes the largest companies listed on the Toronto Stock Exchange, appreciated by 77 per cent. While this represents a sizeable increase, the value of residential real estate over the same period increased by an even greater amount in some parts of the GTA.
In June 2004, an average home in the Toronto Real Estate Board’s market area cost $316,532. Last month, the same home would have cost $568,953, representing a cumulative increase of 80 per cent. In the City of Toronto, the cumulative increase was comparable to the overall figure, coming in at 79 per cent, from an average house price of $345,792 in June 2004 to $617,854 last month.
In York and Halton Regions, the increases were robust. The June 2004 average price for a home in York Region was $356,226 compared to $679,687 last month, resulting in a cumulative increase of 91 per cent. In Halton Region, the cumulative increase has been 94 per cent, from an average price of $320,599 in June 2004 to an average price of $623,420 last month. Increases in Durham and Peel were also healthy at 62 and 74 per cent respectively. The fact that a home purchase works double duty, offering the backdrop for important life events while it quietly builds your wealth, should also be considered when measuring its return on investment.
In short, regardless of the part of the GTA that you may call home, ownership housing has experienced a substantial increase in value historically. While past gains aren’t necessarily a perfect guide for the future, it seems reasonable to assume that as the population and economy of the GTA grows, so too will the value of residential real estate. It is also important to consider the fact that investment in home ownership offers something that no other investment can: the opportunity to live in your investment while establishing yourself and your family in a vibrant community.
While it’s wise to be cautious of debt associated with large purchases, it’s important to note the difference between good debt and bad debt. The latter involves indulging in life’s luxuries while good debt involves spending your money so that it will work for you as an asset to build more wealth. Provided that you are spending what you can reasonably afford, a home purchase unquestionably represents good debt.
For more advice on forging a path toward a solid financial future, talk to a Greater Toronto REALTOR®, and for the latest updates on our city’s housing market, be sure to visit www.TorontoRealEstateBoard.com
Paul Etherington is President of the Toronto Real Estate Board,
a professional association that represents 39,000 REALTORS®
in the Greater Toronto Area.
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Article source: http://www.torontorealestateboard.com/market_news/president_columns/pres_sun_col/index.htm
Tags: Toronto Realtor