An article written by Carrie Freestone at RBC illustrates why productivity in Canada has been in freefall in the past decades. Although the article focuses more on housing affordability, it can also give us a first-hand look at the (oversized) role of real estate in Canada. Let's review some of the key points: 1. "Home ownership is the primary method of accumulating wealth in Canada"
50% of all wealth created in Canada in the past three decades.
2. "Homeowners saw their net worth grow from nine times household disposable income to 13 times since the fourth quarter of 2010".
3. "Canadian homeowners net worth 4x higher than renters".
While renters saw little growth in their net position, the home owners saw 4x more growth. This includes financial assets excluding pension accounts etc. but real estate equity represents the largest chunk of that growth.
Why would investors of all types be interested in investing in businesses that struggle
to attract talent, innovate or export when they can invest in real estate
and participate in the real estate wave of Canada? The article and the graphs speak for themselves.
What could have provided better or comparable growth to renters?
Is real state such a profitable sector, after all expenses?
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