So, many first time homebuyers in the Canadian real estate market have been priced out of the market, and might be thinking: haven’t homeowners become rich?
You might have noticed that while many folks bought in markets such as Vancouver and Toronto, that have actually been the largest factors in average Canadian real estate prices surging- they typically have NOT cashed out their home equity.
How haven’t homeowners become rich?
I know this is a taboo subject, but that said: it’s an interesting question. People who have bought places at a third or half their market value today aren’t seeing the returns that they should have. That means, they still have debt even on cashing in their return.
The fact is, many people have treated their home as something other than an investment. If you buy a home and live in it, that’s totally understandable. The fact is, you should still understand that a large purchase will probably increase in value eventually- so keeping your costs low are essential.
The fact is, the idea of a home as a trap for debt is only as bad as future rent if you keep your expenses under control. The idea is, that if you were able to comfortably budget for a home 20 years ago, and you have somehow fallen behind, and are somehow in possession of your home still: you have an exit today.
Bad Debt in Canadian Real Estate:
There are always exceptional cases. Losing an income source, losing a loved one – all things beyond your control. In most cases, however, bad debt in a home typically is a matter of poor planning. Particularly because people who bought homes 20-30 years ago in the city of Toronto or Vancouver had a distinct opportunity to own properties at well below today’s market value.
If we take into consideration that wages are practically stagnant, people today have a lot less buying power than people in their same demographics several decades ago. People missed opportunities in ownership by NOT being careful.
So, if you’re asking yourself WHY some people have not profited from this market upsurge with a property they purchased many years ago, the key is to take it as a lesson. We can learn from those who lost in the market. Not that it is always a fair outcome: it’s just something that may very well be a reality for any of us!
How To Become A Millionaire By Investing in Canadian Real Estate:
The fact is: many homeowners in Toronto and Vancouver did not buy a property for the purposes of investment. When your largest piece of equity is also the place that you live, and comparable living situations have become priced well above your means, you cannot cash out!
For many owners in major cities like Toronto, if they want to continue living in their area: they must buy another property for essentially the same rate that they sell their properties at. While many people opt to simply hold on to their homes: downsizing buys less and less.
Whereas benchmark condominium prices have shot up- similar ROI on homes with much larger square footage have not seen comparable growth. Why live in a condominium when you could own a piece of land? The answer would be convenience and lifestyle, as opposed to making money.
Releasing equity is a large part of the reason that Canadian real estate growth has not made the average joe a millionaire!
You might not want to get rich when you own a home, but you certainly do not want it to be an immense burden for several decades when it should offer a healthy return on investment. To make a wise decision takes honest consideration of your resources!
We have some pre-construction opportunities that might be your ticket to investing your money for growth. Rather than overpaying for simply a residence, you may have a better opportunity to build equity in untapped parts of Canadian real estate. Fill out a contact form, send me an email, give me a call or visit me on Facebook.
Don’t join those ranks that make you wonder why haven’t homeowners become rich, Canadian real estate is still an excellent opportunity to build equity.