Unparalled Boom Drives Housing By JANE GADD Tuesday, April 26, 2005 From Wednesday's Globe and Mail
Shawn and Tammy Reain, two Calgary accountants in their mid-30s, made so much money on their first house, bought four years ago, that they have been able to double their fun — they just bought a condominium in the city core and a recreation home in Canmore.
“We paid somewhere in the mid-200s in December, 2000, and sold for more than $400,000,” Mr. Reain says. “We've been able to divide our lifestyle into recreation space and business space.”
Now the couple can walk to work from their condo in the Mission neighbourhood and ski and hike in the Rockies on weekends.
The Reains are among a tidal wave of home buyers feeding an unprecedented swell in housing market activity and prices in the past decade. A report released Tuesday by Re/Max Canada says Canadians have flocked to the housing market in every major city, preferring the security of housing to the vagaries of the stock market and mutual funds.
Since 1995, 3.6 million housing units have been sold in 16 urban centres across Canada, a 25-per-cent increase from the decade of 1985 to 1995, Re/Max reports.
The average price appreciation of homes across the country has been 53.7 per cent during the decade — more than 5 per cent a year.
Prices have zoomed up most spectacularly in Montreal, Calgary and Halifax-Dartmouth.
In Montreal, where increased economic stability and a cultural shift away from renting has driven up the market, prices rose 85.9 per cent over the decade. In Calgary, the booming oil market led a housing market surge that saw prices inflate by 81.7 per cent. And in Halifax, which also owes its rejuvenation to oil and gas and the jobs they have created, prices soared by 77.3 per cent over the decade.
Vancouver, despite having the most costly real estate in Canada, had only a modest rate of price appreciation in comparison to other cities — just 19.1 per cent.
The report's ranking of the top 10 markets by price appreciation put Saskatoon fourth at 76.2 per cent, followed by Kelowna (76.1 per cent), Edmonton (71.4 per cent), Ottawa (69.8 per cent), Victoria (66.1 per cent), Prince Edward Island (60.5 per cent) and Toronto (60.3 per cent).
“It's the kind of investment Canadians like ... one you can have control over,” says Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada. “People are very uncomfortable or uneasy about RRSPs; for many their house has become their RRSP.”
The Re/Max report showed activity levels in the housing market — the number of units bought and sold — doubled in Ottawa, Toronto, St. John's, Calgary, Montreal, Victoria and Edmonton from 1995 to 2005 and tripled on Prince Edward Island.
Mr. Reain, the Calgary accountant, said he definitely had investment on his mind when he bought the recreation home in Canmore.
“We think the condo will only rise moderately because so many are going up in town. But we're very bullish on the Canmore property.”
Earle King, an optician in Halifax, jumped back into the housing market this month after renting a condominium for four years.
“The investment part was important — that's what drove me out of the condo,” Mr. King said.
Before he moved into the condo in 2001, he had made $100,000 on a home he bought 20 years ago for $22,000.
Although Mr. King and his wife are empty-nesters, they have chosen a four-bedroom home in Dartmouth, in Halifax's north end, because of its investment potential.
“I was quite keen on a condo, and looked at some, but you know you pay $120,000 to $150,000 and then you have condo fees of $300 a month and taxes on top of that,” Mr. King said. “I thought this is ridiculous. You virtually double your value [with a house].”
The semi-detached home the Kings bought cost $142,000.
“I'll be retiring in five or six years so I didn't want much of a mortgage,” Mr. King said.
In Montreal, the past 10 years have seen a huge shift in mindset away from renting toward home ownership, Mr. Polzler says.
“In the past, Quebec was more like Europe with people preferring to rent.... The mindset has really changed and people are looking to make the investment.”
Mr. Polzler also credits an increased sense of stability in Quebec after the turmoil of the early 1990s and the 1995 referendum for the huge property value appreciation.
“In the early 1990s prices dropped so low that people began to say we're dummies not to buy it up,” Mr. Polzler says.
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