We often sit in bars debating with our friends the pros and cons of investing in the stock market vs investing in property (we’re a real wild bunch here, huh?). Toronto’s housing bulls have long said that purchasing a home is the best investment you can make hands down, but we needed a little more than chatter to convince us, so we did some digging.

Using historical returns we graphed the numbers of a hypothetical scenario: If you invested $100,000 20 years ago, what would that investment return today? We compared the TSX, Toronto Real Estate, and the NASDAQ to for good balance.

The TSX Composite vs Toronto Real Estate

The housing market hands down beat the TSX composite, giving you a whopping 544% return over 20 years. The TSX still produced a healthy return of 386%, but those 158 points could have purchased a lot of beer.

The NASDAQ Composite vs Toronto Real Estate

One uniqueness of the Canadian market is the majority of Canadians consider their homes investment vehicles, whereas the rest of the world generally considers it an asset. That isn’t to say that people aren’t making money on property elsewhere, it’s just most people don’t feel comfortable gambling with their home, you know, that whole don’t s**t where you sleep thing. So we added the NASDAQ for contrast, and not surprisingly it crushed both measures of the Canadians market with a 1,422%.

Which Should You Purchase Today?

Any of them really, just don’t keep it in under your mattress or let it accumulate at your bank. Keep in mind this is far from an exhaustive risk assessment. Mortgage rates, capital gains, and your ability to exit your investment should all be considered before purchasing anything. Also leverage, and the cost of that leverage (i.e. margin and mortgages) will play a factor.

There’s also the emotional factor. Some people find sleeping in their own home more satisfying than receiving an email saying you made money.

About Our Number

For the NASDAQ and TSX, our analysts used the composite numbers. Home values were sourced from the Toronto Real Estate Board (TREB). Happy investing!



