It’s the Canadian way to believe in houses as an investment.

In a recent RE/MAX poll, 73 per cent of participants said they believe home ownership is the best investment they can make in 2024, a similar number to last year. Now for a reality check.

The national average housing price peaked at $816,720 in February, 2022, and then sank to $659,395 in January of this year. This drop of 19.3 per cent doesn’t kill the idea of houses as investments narrative, but it does offer some perspective.

Expect to hear a lot about housing this spring. Affordability for first-time buyers can only be described as awful, even if prices are well off the peak levels of a few years ago. Meanwhile, mortgage rates have edged lower and there are signs of revival in the housing market in several cities. Properties are selling faster and there’s even talk of bidding wars in Toronto.

Economic conditions on the surface don’t seem conducive to a housing rally – interest rates remain high, living costs are a challenge for many, late debt payments and defaults are on the rise and economic growth is barely perceptible. Demand for housing is partly fed by population growth and the natural flow of people buying property and starting families. But the RE/MAX poll suggests that another factor driving sales is the view of houses as investments.

One of the basic rules of selecting investments is that past returns are an imperfect indicator of what’s to come. Housing has been excellent in the past – the average annual increase in the national average resale price the past 10- and 20-year periods is roughly 6 per cent, according to Canadian Real Estate Association data. If a home is your principal residence, that gain is tax-free. But even with high levels of immigration, there’s reason to question if housing prices can keep up that pace of growth in a slow-growing economy where borrowing costs remain high.

The best investment you can make this year is in a diversified portfolio of bonds and Canadian, U.S. and international stocks that you hold for at least 10 years. Houses may outperform, but at what cost? Ten more years of 6 per cent annualized growth in house prices would give us a national average resale price of $1.2-million. At that point, houses turn into luxury goods.

The RE/MAX poll offers some insight into how people will afford homes both now and in the future. Almost half of participants said they would consider alternative ownership models like buying with friends or family, buying a home with a rental unit or a rent-to-own arrangement.

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Rob’s personal finance reading list

The inevitability of hot housing

Bidding wars are back in Toronto. I’ve been asked a few times lately what’s ahead for housing and right now I’m seeing signs that the slump of the past year or so is over. Now for a look at the cities with the highest percentage of houses listed for sale at or above $1-million.

Cheapest cars in Canada

I was surprised to find two vehicles still under $20,000, and a few others around $25,000. The average vehicle price these days is close to $46,000.

The investment case for gold

Gold prices have soared recently, and that means more chatter about the benefits of adding exposure to gold to an investment portfolio. I can’t see the point of gold myself because it’s so unpredictable, but many would disagree.

The battle for Rocco Jr.

A court case that involved custody of a deceased owner’s pet dog is a reminder to consider your pets when writing a will. The dog involved is a bull terrier named Rocco Jr.

Ask Rob

Q: I wonder if you plan to review the Wise card?

A: The Wise card is a great way to cut the cost of foreign exchange when paying for purchases outside Canada. I wrote about Wise in a column last year.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Tools, explainers, guides and charts

“Can someone please explain GICs to me?” – a Reddit thread

The Money-Free Zone

As I was cueing up a Willie Hutch song for today, I heard that Eric Carmen died. Mr. Carmen’s opus All By Myself pretty much defines the mellow rock popular back in the 1970s. Mr. Hutch was a soul/R&B singer on the Motown label whose creative peak was happening while All By Myself played endlessly on AM radio. His soundtracks for the movies Foxy Brown and The Mack are great from top to bottom, but the song I Choose You stands out for its shining production and vocals. It’s been sampled a bunch of times by other musicians.

Watch this

Important stuff to know about buying a home with a friend or family member.

On social media

Food inflation in February – pass the Tums.

In case you missed these Globe and Mail personal finance-related stories

More Rob Carrick and money coverage

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Even more coverage from Rob Carrick:

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• ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
• 📈 Investing: Canada’s top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer’s guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
• 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle