A recent study released by StatsCan found that purchasing a home is a wise choice as an investment for retirement. The study, which studied the years between 1969 and 2006, concluded that home ownership made a significant and rising contribution to household finances for retirement-age households.
According to the report, Study: Incomes from owner-occupied housing for working-age and retirement-age Canadians, 1969 to 2006, the financial benefit of owning a home is equal to the rent that does not have to be paid.
Over the study period, which saw the rise and fall of interest rates, periods of prolonged unemployment and fluctuations in income, the majority of households chose to own their own homes rather than rent. This gave them a major edge later in life.
In 1969, nearly seven out of 10 households headed by an individual aged 70 and over owned their home, with a similar proportion in 2006 owning their homes.
Of this group of retirement-age homeowners, the vast majority, about nine out of 10 households, owned their homes without a mortgage, in both years.
For households in the 70 and over age group, the financial benefit from home ownership increased net incomes by 11% (+$412) in 1969, from $3,739 to $4,151. By 2006, this financial benefit increased the average incomes of this age group by 17% (+$6,391) from $38,343 to $44,734.
This is good news for all home buyers. Although it’s a concept we may all have known intuitively, having the data to back it up makes it more concrete.
We have low interest rates for now –there have been hints the rates will rise this spring –so it really is a good time to buy. The Canada Mortgage and Housing Corporation (CMHC) has released its market outlook for the year and the news is good for Hamilton real estate – demand for new and existing homes will pick up this year. Sales of existing homes will increase, buoyed by favourable interest rates, strong price competition among sellers and an ample supply of listings available for sale.