Home Owership Still Best Investment, UBC Study Finds!

...An article in The Vancouver Sun newspaper today on February 20, 2007, written by Bruce Constantineau reported, "Renters must be a 'phenomenal' investor to match homeowners.'  This is according to a study at the UBC Sauder School of Business .  The study looks at data from 1979 through 2006 and examines the wealth homeowners can achieve by paying down a mortgage, compared to what a renter can achieve by investing the difference between owner and renter costs, along with the amount equal to a home down payment.

What is the result for this time period in Vancouver? 

Well yes, in Vancouver, BC,  really brilliant investors could have matched home owners in wealth gain ... only if renters had consistently invested 100% of the difference between owner and renter payments.  If the mortgage payments were high and the rents were low this could have beem possible.

Is this true for everywhere?

No,  renters in  Edmonton, Halifax, Montreal and Regina could have gained 20% more wealth than home buyers.  Renters in Calgary and Toronto could not have matched this same gain in wealth compared to homeowners.

Bottom Line?

Both renting and owning have non-monetary advantages.  Advantages to renting - more mobility available and greater portfolio diversification.  Advantages to owning - the capital-gains-tax exemption and the "forced savings" by paying a mortgage.  Mortgages force you to save!  This is a huge advantage to home ownership.

Somerville said to expect the home-ownership investment advantage to continue in the future.  People still want to move to Vancouver.  The kids of the "boomers" will be looking for homes and immigration will boost housing demand.

Sommerville's quote for the day:

"If lots of bad things happen that somehow make Vancouver unattractive, bad things are probably happening to the stock exchange, too."