Long-term homeowners see big profits

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By Meagan Fitzpatrick, CanWest News Service
Published: Wednesday, January 24, 2007

If you’ve stayed put in the same house over the last 25 years, it could be worth as much as 264 per cent more than when you moved in, according to a new survey.

An analysis of 17 housing markets across the country by Re/Max real estate company released Wednesday found that the average price of a home in Canada rose 11 per cent annually over the 25-year period studied, rising from

$76,021 in 1981 to an estimated $277,000 in 2006.

Almost half of the markets reported double-digit appreciation annually, according to Re/Max. Leading the way was Barrie, Ont. The small city north of Toronto saw a whopping price increase of 372 per cent over 25 years.

Price appreciation topped 240 per cent in seven Canadian cities including Ottawa (297 per cent), Greater Toronto Area (290 per cent), and Greater Vancouver Area (242 per cent). Victoria reported a 229 per cent jump and Calgary was up 227 per cent.

"Conventional wisdom used to be that real estate was a relatively safe, long-term investment that typically appreciates at a rate of five per cent annually," Michael Polzler, executive vice-president and regional director of RE/MAX Ontario-Atlantic Canada, said in a statement. "These statistics clearly tell a different tale. In the top 10 markets, real estate values rose at least eight per cent or more on an annual basis. Even the worst performing market in the country experienced an increase of close to six per cent annually since 1981."

The report highlights several factors that likely contributed to the stunning rise in housing values in Canada. Number one is a 25 per cent increase in Canada’s population.

The report also said that today’s housing markets are more insulated than they were a quarter-century ago thanks to economic diversity. Alberta has done well to attract major corporations for example, Saskatchewan shifted its economic base from agriculture to natural resources and Ottawa’s high-tech sector played a big role in the overall health of its residential real estate market, the survey said.

Immigration is another influence, and Baby Boomers have also been a powerful influence behind housing demand according to Re/Max. Canadians in that demographic have not only been buying their own homes or retirement properties, but also assisting their children in buying houses.

Elton Ash, regional executive vice-president of Re/Max in western Canada called the survey’s results remarkable, especially considering the economic volatility of the marketplace in the last 25 years.

""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," he said in a news release. "Any one of these disasters would have had a significant impact on real estate markets in the 1980s."

Average price for a residence in 2006:
- Canada $276,824
- Vancouver $509,876
- Victoria $400,000
- Calgary $346,673
- Edmonton $250,915
- Regina $131, 851
- Saskatoon $160,577
- Toronto $351,941
- Ottawa $257,481
- Montreal $215,659