I came across two articles this past week that deal with housing affordability and values across Canada. They are very much worth reading. The first one is from the Royal Bank discussing affordability. Housing in Vancouver and Toronto are now at their record worst level of affordability, surpassing the peak of the last housing boom in 1989-1990. After that bubble burst it took until 2000-2005 for housing to get back to previous levels, in the Toronto area. All the stats are in the RBC article.
The second article from The Globe and Mail, discusses how Canadian housing is an anomaly in the world, and that ownership to rental costs have increased markedly. Both of these articles are a cautionary note for those considering purchasing in these two markets. Most other markets are still reasonable.
Despite lots of noise to the contrary, many stocks are still reasonably valued, especially in the Canadian market. Stock investing in a TFSA is a great way to save for a house while waiting for more reasonable valuations. History usually repeats itself, and an era of very high valuations is likely to be followed with a period of stagnating or declining valuations.
My book, “Stocks for Fun and Profit: Adventures of an Amateur Investor,” has numerous references to real estate, and one entire chapter dedicated to it. I have been an active real estate investor and wanted to share those experiences, in a similar way to the stock investing experiences. I do this in an effort to help others experience less knocks from the “School of Hard Knocks,” than I experienced in my investment journey.