Christian Farstad - Vancouver ScotiaMcleod

Purchasing a home is one of the best financial decisions you can make. It can provide you with a sense of security and safety not found in most other investments. You also get the benefit of tax free capital gains on your primary residence if you ever have to sell.

Vancouver is a wonderful place to live (especially on the west side!). But real estate is very expensive. The rise in prices over the past 10 years has put many people out of the market, and at the same time, it has made many others millions of dollars.

Even as other Canadian cities and cities around the world have experienced significant price drops in real estate, Vancouver seems to be holding its value nicely.

I recently came across some information that surprised me. I’ve provided a few charts comparing Vancouver real estate to the equity markets. The difference in performance is amazing.

The comparison is from January 1977 – September 2009. An $80,000 detached home is now worth $872,116. An $80,000 investment in the Canadian equity markets (TSX) would be worth $2,389,539! A difference of $1,517,423!

• Look at the charts here
  

Keep in mind that this chart does not take into account leverage. The retail investor can’t buy a $1,000,000 equity portfolio with 5% down ($50,000) like you can do to buy a house. But the return differential is very surprising.

These prices are only up to September 2009. Real estate in Vancouver is up from that time but so are the markets. The TSX is up about 1000 points over September 2009 (including today’s big loss). The gains over real estate would probably be even higher.