High Shelter Prices Cost A Fortune

Danielle Park, CFA6.38K FollowersFollow5ShareSavePlay(4min)Comment(1)SummaryAbout 36% (14.8m) of Canada’s (41m) population lives in three metro areas (StatsCan data): Toronto, Vancouver, and Montreal.Two months short of the 4th anniversary of the February 2022 real estate bubble peak in Canada, belief in mean reversion is spreading.On a full-cost accounting basis, homeownership often yields a flat or negative return. It is consumption spending, and inflated prices end up costing a fortune. Justin Paget/DigitalVision via Getty Images About 36% (14.8m) of Canada’s (41m) population lives in three metro areas (StatsCan data): Toronto, Vancouver, and Montreal. Unfortunately, these three cities have the dubious distinction of experiencing the most significant home price inflation inThis article was written byDanielle Park, CFA6.38K FollowersFollowPortfolio Manager, financial analyst, attorney, finance author, a regular guest on North American media. Danielle Park is the author of the best selling myth-busting book “Juggling Dynamite: An insider’s wisdom on money management, markets and wealth that lasts,” as well as a popular daily financial blog:www.jugglingdynamite.com Danielle worked as an attorney until 1997 when she was recruited to work for an international securities firm. A Chartered Financial Analyst (CFA), she now helps to manage millions for some of Canada's wealthiest families as a Portfolio Manager and analyst at the independent investment counsel firm she co-founded Venable Park Investment Counsel Inc. www.venablepark.com. For two decades, Danielle has been writing, speaking and educating industry professionals and investors on the risks and realities of investment behaviors. A member of the internationally recognized CFA Institute, Toronto Society of Financial Analysts, and the Law Society of Upper Canada. Danielle is also an avid health and fitness buff.Quick InsightsHow significant is the projected Toronto home price decline by 2026?Royal LePage projects Toronto-area home prices will drop 4.5% by the end of 2026, reflecting growing mean reversion sentiment.What is the impact of long-term borrowing on total homeownership costs?Depending on the amortization period, borrowing $600k can increase total costs by 50% to 226%, dramatically raising the long-term financial burden.How does full-cost accounting affect the investment case for Canadian homeownership?When factoring in all costs, homeownership often yields flat or negative returns, positioning it more as consumption than a true investment.Recommended For You