The BIG difference between a house and a “home”.

Believe it or not there "*is* a difference between a house and a home, and the difference is getting bigger every year. A home is somewhere you currently live. It’s your principal residence or where you grew up. First and foremost it’s your shelter, but it’s also where most of us spent time growing up with family and made everlasting memories. You know the one wall in the house covered in pencil crayon where you measure your child’s height every year? That wall is the best way to describe a home. You may not even own the house you are in, maybe you’re renting, maybe you’re in a small apartment or condo (the size and price are irrelevant) - where you hang your hat should be a space where you feel most comfortable and that’s what makes a home special.

So where the heck am I going with this? For a very long time the exchange of houses or “homes” has been a peer to peer transaction. I buy a house so I sell my house to someone who wants to buy it who in turn sells their place or moves out of their rental, (all with the help of an agent who is tall and wears tight pants of course…). Real estate provides a great pride of ownership and has always been considered the "Canadian dream" but few people buying a new house back in the day did so because they considered it a great investment.

We fast forward to 2021 and real estate has now officially become a commodity. A house is now looked at as an asset, and real estate is definitely its own asset class. Over 90% of people buying homes now cite “the financial upside” as the number one reason for buying. In the US the residential real estate sector gained over $2.5 trillion dollars in 2020 and is now valued at over $36 trillion - so more investors and the VC firms have taken notice. There have always been real estate investors and REITs are not a new concept, but we are now seeing brokerages like Zillow buying up thousands of properties every month down in the States where they are dealing with rising prices due to a supply shortage as well. We’ve come to a point where a big percentage of the buyers are no longer end users - and there is nothing wrong with that - but it’s still quite a shocking change.

It’s hard enough for buyers to buy a property these days. The supply is low, and competition is fierce, but I fear it won’t be long until the winning bidder on a residential property will be yet another Ontario numbered company. This newsletter is probably depressing for potential buyers, but there is some good news. Residential real estate has become a very popular investment option because of the low interest rates, so hopefully when interest rates go up in the next year, that will scare some of the investors away. Some investment is very important, but we still need supply so our end users can buy property and enjoy the “Canadian Dream” of home ownership.