Is residential real estate still a great investment?

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Is residential real estate still a great investment? GlobeInvestor

Owning a home can be an important part of growing wealth, but there’s a risk in relying too much on that single asset.Housing values keep rising. According to the Canadian Real Estate Association, the national average price for homes sold this October was up 5.8 per cent year-over-year. Although sales in the Toronto and Vancouver areas skew that figure, home prices were still up by 4.7 per cent nationally when those two markets are excluded.

Does that still make buying a home a great long-term wealth strategy? Kurt Rosentreter, senior financial advisor at Manulife Securities Inc. in Toronto, is a fan of the financial discipline that comes with a mortgage. “It is the most reliable form of forced savings.” Why? Some people never see the windfall as they’re reluctant to sell and downsize or relocate to a more inexpensive locale.

Ed Rempel, an independent fee-for-service financial planner in Toronto, says the buy-or-rent question is a tricky one. Advisors need to consider their clients’ financial discipline when making recommendations. Are clients likely to invest the extra cash flow that comes with renting versus paying a mortgage, taxes and the upkeep that come with home ownership? If not, people might do better with the forced savings that comes with owning.

But Mr. Rempel worries that this strategy can pile on even more concentration into the one asset class of residential real estate.

 

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globeinvestor looks like that market, like the stock market is topping out

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