on up, you should too.
Many Canadians have been brought up to believe that simply owning a home is the only financial strategy you'll ever need. It's almost like a religion! "I have no interest in the real estate market," you might say. "Besides, housing prices are rising, so I'm covered."
According to StatsCan, the average price of a new home in Canada rose by 47% in the last decade. If you bought a new home for $200,000 in 1997, it would cost you nearly $300,000, on average, to buy an equivalent home in 2007. On paper, that's a gain of $100,000.
But what does this gain actually do for you? Your tax bill may go up, for one thing. Maintaining your home will be more expensive as well - construction and maintenance costs have risen faster than overall housing prices.
On the flip side, nobody's going to write you a cheque for your $100,000 gain. If you stay in your home for your lifetime, and make no improvements on it, you'll be no wealthier than you were when you started out, and your lifestyle will be no better either.
To get ahead, you need to take action to grow your assets. This doesn't mean becoming a real estate professional, but it does mean taking advantage of opportunities to:
- Trade up to a home of higher value.
- Increase the value of your current home by renovating.
- Buy real estate in addition to your home.
Profiting from home ownership requires concrete action. If you don't act, you have no way of locking in your gains from a rising real estate market.