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The only down side is you can't live in your ETF.
That is the standard argument about real estate that does not really hold water on a full cycle basis. Yes, one has to factor in alternative rent in the overall calculation to compare apples to apples, but owning RE on a non-investment basis (not able to write off costs) does not cut it in most jurisdictions. I agree there have been periods in Toronto and Vancouver in particular where real money has been made, and in Calgary/Edmonton if one could market time correctly (like sector investing in commodities), where CAGR in RE ownership has beat capital markets, but so have there been times of great strength in capital markets.

My own spouse refuses to be rational about the investment value in our own home because she doesn't want to convert emotional ownership into hard numbers, and won't admit to the massive bleed of money sunk into it on an ongoing basis. That is fine. Just admit it and call it a day.....
 

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The only down side is you can't live in your ETF.
I disagree. I actually just converted some units of an ETF into Vancouver housing.

In fact, this kind of liquidity (from an investment portfolio) is far easier to convert into the kind of housing you need, with flexibility. I can rent in one spot for a month, then get up and go somewhere new. I can go to a foreign country for a year and rent a temporary home or vacation spot. Or hop over to a city and do an extended hotel/apartment rental.

You should know this Eder, as a guy who spends a lot of time in Hawaii.
 

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To be clear I'm not defending the OP's proposition. In fact I disagree with the entire premise of buying real estate for capital gains.

No one could have predicted what happened in Vancouver, but the fact remains that it made a lot of people wealthy. These are mostly regular people who would not otherwise be wealthy... the sort of people who know nothing about investing, and wouldn't know the difference between a couch potato portfolio and whatever high fee funds the big banks want to sell them.

The average person knows very little about markets, CAGR, or whether their investments are returning more than inflation. They see their house double in price, and they feel like a genius. As you can see from the chart AltaRed posted, the average detached home increased in value by about 300% since 2002. That fits with the anecdotal stories I've seen firsthand.

That's a pretty good return by any standards, and a crazy good return to someone who has money sitting in chequing accounts or saving accounts earning 0.25% interest... that's assuming they have any savings at all!

It's difficult to generalize and say everyone would have been better off renting. For my mom, renting made no sense whatsoever... she could afford to buy clear title. Her monthly costs including maintenance are lower than what it would cost to rent a similar house. For others, buying was either a lifestyle decision, or a gamble that just happened to pay off.

Anyhow, what happened is in the past, and I've said before that I think the party is over for Vancouver Real Estate. I certainly wouldn't buy today expecting capital appreciation.
 
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