Still best investment for many, says David Bach
Dave Hall
Province
House prices have already skyrocketed in Vancouver. Photograph by : Ric Ernst File, The Province
WINDSOR, Ont. — With Canada’s real-estate boom not expected to go bust for the foreseeable future, a personal-wealth expert and bestselling author is recommending that prospective homebuyers do “everything humanly possible to get into the market.”
Despite skyrocketing prices across most of the country, real estate is still the best investment many of us will make, said David Bach, author of The Automatic Millionaire Homeowner.
“It’s an acknowledged fact that renters have an average net worth of less than $2,000 while homeowners on average have a net worth exceeding $140,000. So it’s imperative that people seeking to increase their net worth get into the real-estate market,” said Bach.
“Even in the Toronto market, where prices have skyrocketed in recent years, it’s possible to get in if you consider making a 25- to 30-minute commute from where prices are more affordable.”
In the Lower Mainland, the trek to possible affordability will take a bit longer than half an hour, but the general principle does apply.
The farther out you go, the more moderate prices become, although prices are rising just as quickly up the Fraser Valley as they are downtown in Greater Vancouver these days.
For the vast majority of people, their home is the largest asset they will ever invest in and it’s become a huge part of their retirement nest egg, with many retiring off the equity in their home by downsizing.
Bach, who is also an adviser to Scotiabank on financial issues and trends, warns, however, that real estate is not a riskless transaction, and “location has much to do with that. There’s been a huge appreciation in real-estate values in Vancouver, Toronto and Calgary, but that isn’t true everywhere.”
Bach said the biggest myth about buying real estate is that “you need a large down payment, where in actual fact you can get in with five per cent down or even less.
“And it’s relatively painless to save for a down payment if you feel more comfortable with one. I call it the latte factor. Just think about the small items you buy every day without thinking — lattes, muffins or lunch — and imagine how much you could save if you cut some of them out. Within two years, that could be a $10,000 down payment to get you started.”
Bach said there’s unlimited interest in the real-estate market because, “unlike the stock market, real estate is something you get to enjoy and live in.”
ScotiaBank senior economist Adrienne Warren said she believes that high prices can be sustained in the long term.
“Stable interest rates are seemingly here to stay, and that attracts long-term housing investment,” said Warren.
“And our strong dollar versus most other currencies is attracting more foreign investment from those who see Canada as a very affordable market.”
© The Vancouver Province 2006
