While you’re planning for your first home purchase, you may still be renting and saving for a down payment. There are advantages to a larger down payment, but there are also a number of good reasons to become a homeowner sooner. Today’s “no down payment” options give you the ability to make it happen.
The reasons why you would want to buy a home are obvious: the ability to remodel or redecorate as you please; being able to put down roots in a neighbourhood you love; preparing to start a family. But along with these emotional reasons to purchase a home, there’s a sound financial reason to buy right now: your home may be the single biggest investment you’ll ever make – one that could pay off significantly in the long run.
You’re not just a homeowner – you’re an investor
Consider this: over the past 10 years, there’s been a 65% increase in the value of the average Canadian home. To put this into dollars and cents, in 1995, the cost of an average home in Canada was about $150,720*. Today, that same house would be valued at about $248,176* – a big increase in value over this period of time. Owning a home has proven to be a stable investment offering good rates of return. When you consider the volatility of the stock market, your home may offer you a more dependable rate of return, without the stress of wide fluctuations in value. And, of course, you can’t live in a stock portfolio!
The average value of a detached bungalow has risen dramatically across Canada in the past 10 years.
| Location | 1996 Price | 2006 Price |
| Canada-wide | $150,886 | $274,163 |
| Vancouver | $288,268 | $488,091 |
| Calgary | $134,643 | $325,481 |
| Edmonton | $109,042 | $220,124 |
| Regina | $76,781 | $125,068 |
| Toronto | $196,476 | $353,134 |
| Ottawa | $140,513 | $255,550 |
| Montreal | $105,729 | $208,878 |
| Quebec City | $84,994 | $144,334 |
| Halifax | $105,869 | $197,044 |
| Saint John | $94,142 | $124,066 |
Building home equity
Your home equity can also be used for other purposes. The money you use to buy, maintain and improve your home all contribute to an increase in its value and your home equity. Your equity can help you lower your borrowing costs for other goals, such as renovations, a car, a child’s education, a vacation property or other investments.
Get a tax break
There’s also a tax advantage to purchasing a home. When you sell your principal residence for more than you paid for it, the increase in value, known as capital gains, is yours tax-free. If, for example, your home sells for 25% more than you paid for it, it’s money in your pocket, rather than the government’s.
The bottom line? Your home is a long-term investment that will provide you a great deal of emotional satisfaction while building your net worth.
*Source: Canadian Real Estate Association (CREA)
———————————————————————————
Contact the Jeffrey Team for more information
Incoming search terms