While many investors tend to have different opinions about how best to invest their hard earned money, more Canadians than ever are in agreement that owning a home is a good investment.
According to RBC Royal Bank's 13th Annual Homeownership Survey, a record 90 per cent of Canadians, the highest level since 1998, say buying a home is a good investment. Those looking for further proof about how much we value our homes need look no further than the 17 per cent of homeowners who say their homes will be their primary source of retirement income.
"There's a definite consensus among Canadians when it comes to the financial benefits of owning a home," said Catherine Adams, RBC Royal Bank's vice-president, Home Equity Financing. "In fact, the average homeowner estimates that his or her home has gone up 18 per cent in value over the last two years."
This year's survey reveals 72 per cent of all Canadians expect housing prices to rise over the next year. However, homeowners may be underestimating the true value of their properties. The RBC survey notes Canadian homeowners estimate the average market value of their homes at $214,337 which is somewhat less than the national average of $258,274 reported by the Canadian Real Estate Association in January of 2006.
RBC also notes 60 per cent of Canadian homeowners currently hold a mortgage; up four per cent from 2005 and 10 points greater than 2000. The average amount owing is $95,840. And one-third, (32 per cent) of those age 55+ say they hold a mortgage. This supports a recent RBC study that showed that nearly half (48 per cent) of Canadians do not believe it's necessary to retire debt free.
When it comes time for renewal, half the mortgage holders will likely go with a fixed rate mortgage, 25 per cent say they will select a variable rate, and another 25 per cent plan to go with a combination of both. Almost half of all mortgage holders (48 per cent) plan to lock in their renewals for five-year terms. And while only eight per cent had planned to refinance last year, 27 per cent did so in the last year. Of particular note is that 38 per cent of mortgage holders have borrowed against the equity in their homes.
"A home is most definitely an investment you live in," added Ms. Adams. "And, as your home continues to increase in value it often makes sense to tap into that equity for things like maxing RRSP contributions, investments or even funding a child's education through RESPs, especially while rates remain as affordable as they are now. Think of it as putting your house to work for you."
Regional differences noted by RBC Royal Bank's 13th Annual Homeownership
Survey are as follows:
National, BC, AB, SK/MB, ON, QC, Atlantic
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Good investment
90%, 89%, 95%, 95%, 91%, 86%, 90%
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Very good investment
43%, 45%, 54%, 48%, 47%, 31%, 43%
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The home is the retirement fund
17%, 15%, 10%, 14%, 21%, 13%, 26%
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Have borrowed against home's equity
38%, 38%, 36%, 39%, 41%, 33%, 44%
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Have refinanced their mortgage in the past 12 months
27%, 20%, 17%, 30%, 27%, 36%, 21%
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Estimated increase in value, last 2 years
18%, 30%, 18%, 14%, 14%, 19%, 12%
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Approx. estimated market value
$214,337, $313,370, $219,711, $129,628, $242,388, $154,592, $141,081
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CREA market value (Jan. 06)
$258,274, $366,882, $242,478, $133,230, $265,364, $185,788, $135,912
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Have a mortgage
60%, 59%, 58%, 65%, 61%, 61%, 57%
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Avg. amount left owing
$95,840, $128,086, $103,704, $60,571, $111,846, $68,477, $61,256
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The housing industry is a key economic driver in Canada with existing homes, homebuilding, buying, renovation and mortgage expenditures representing an estimated $1.7 trillion for 2006. The sale of homes is an important economic indicator and consumer confidence barometer.
RBC is the largest residential mortgage lender in Canada with more than $91 billion in loans outstanding in 2005 and over 15 per cent of the Canadian mortgage market. As the country's number one source of financial advice on home ownership, consumer surveys are one way in which RBC provides insight to Canadians about the marketplace in which they live.
These are some of the findings of an RBC Financial Group poll conducted by Ipsos Reid between January 18 and 24, 2006. The online survey is based on a randomly selected representative sample of 2,001 adult Canadians. With a representative sample of this size, the results are considered accurate to within (+/-) 2.2 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. These data results were statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.
For full tabular results, please see the Ipsos-Reid website at www.ipsos.ca.
For further information: Media contacts: Kathy Bevan, RBC Financial Group, (416) 974-8810; John Wright, Ipsos Reid, (416) 324-2900; Archived images on this organization are searchable through CNW Photo Archive website at http://photos.newswire.ca. Images are free to accredited members of the media.
To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on Tools for Investors.
Canadians Remain Bullish on Housing as an Investment: RBC Survey
