Canadians Remain Bullish on Housing as an Investment: RBC Survey

Some Could Be Underestimating the Real Value of their Homes

    TORONTO, March 22 /CNW/ - While many investors tend to have different
opinions about how best to invest their hard earned money, more Canadians than
ever are in agreement that owning a home is a good investment.
    According to RBC Royal Bank's 13th Annual Homeownership Survey, a record
90 per cent of Canadians, the highest level since 1998, say buying a home is a
good investment. Those looking for further proof about how much we value our
homes need look no further than the 17 per cent of homeowners who say their
homes will be their primary source of retirement income.
    "There's a definite consensus among Canadians when it comes to the
financial benefits of owning a home," said Catherine Adams, RBC Royal Bank's
vice-president, Home Equity Financing. "In fact, the average homeowner
estimates that his or her home has gone up 18 per cent in value over the last
two years."      This year's survey reveals 72 per cent of all Canadians expect housing
prices to rise over the next year. However, homeowners may be underestimating the true value of their properties. 
    The RBC survey notes Canadian homeowners estimate the average market value of their homes at $214,337 which is somewhat less than the national average of $258,274 reported by the Canadian Real Estate Association in January of 2006.
    RBC also notes 60 per cent of Canadian homeowners currently hold a
mortgage; up four per cent from 2005 and 10 points greater than 2000. The
average amount owing is $95,840. And one-third, (32 per cent) of those age 55+
say they hold a mortgage. This supports a recent RBC study that showed that
nearly half (48 per cent) of Canadians do not believe it's necessary to retire
debt free.
    When it comes time for renewal, half the mortgage holders will likely go
with a fixed rate mortgage, 25 per cent say they will select a variable rate,
and another 25 per cent plan to go with a combination of both. Almost half of
all mortgage holders (48 per cent) plan to lock in their renewals for five-
year terms. And while only eight per cent had planned to refinance last year,
27 per cent did so in the last year. Of particular note is that 38 per cent of
mortgage holders have borrowed against the equity in their homes.
    "A home is most definitely an investment you live in," added Ms. Adams.
"And, as your home continues to increase in value it often makes sense to tap
into that equity for things like maxing RRSP contributions, investments or
even funding a child's education through RESPs, especially while rates remain
as affordable as they are now. Think of it as putting your house to work for
you."
    Regional differences noted by RBC Royal Bank's 13th Annual Homeownership
Survey are as follows:

    <<
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                                                           National  BC        AB        SK/MB
    -------------------------------------------------------------------------
    Good investment                            90%       89%       95%       95%
    -------------------------------------------------------------------------
    Very good investment                    43%       45%       54%       48%
    -------------------------------------------------------------------------
    The home is the retirement fund   17%       15%       10%       14%
    -------------------------------------------------------------------------
    Have borrowed against
     home's equity                                38%       38%       36%       39%
    -------------------------------------------------------------------------
    Have refinanced their mortgage
     in the past 12 months                     27%       20%       17%       30%
    -------------------------------------------------------------------------
    Estimated increase in value,
     last 2 years                                    18%       30%       18%       14%
    -------------------------------------------------------------------------
    Approx. estimated market value   $214,337  $313,370  $219,711  $129,628
    -------------------------------------------------------------------------
    CREA market value (Jan. 06)       $258,274  $366,882  $242,478  $133,230
    -------------------------------------------------------------------------
    Have a mortgage                            60%       59%       58%       65%
    -------------------------------------------------------------------------
    Avg. amount left owing                  $95,840   $128,086  $103,704  $ 60,571
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                     ON        QC        Atlantic
    -------------------------------------------------------------------------
    Good investment                                   91%       86%       90%
    -------------------------------------------------------------------------
    Very good investment                           47%       31%       43%
    -------------------------------------------------------------------------
    The home is the retirement fund          21%      13%      26%
    -------------------------------------------------------------------------
    Have borrowed against
     home's equity                                       41%       33%        44%
    -------------------------------------------------------------------------
    Have refinanced their mortgage
     in the past 12 months                           27%       36%       21%
    -------------------------------------------------------------------------
    Estimated increase in value,
     last 2 years                                           14%       19%       12%
    -------------------------------------------------------------------------
    Approx. estimated market value          $242,388  $154,592  $141,081
    -------------------------------------------------------------------------
    CREA market value (Jan. 06)                $265,364  $185,788  $135,912
    -------------------------------------------------------------------------
    Have a mortgage                                    61%       61%       57%
    -------------------------------------------------------------------------
    Avg. amount left owing                         $111,846  $ 68,477  $ 61,256
    -------------------------------------------------------------------------

    The housing industry is a key economic driver in Canada with existing
homes, homebuilding, buying, renovation and mortgage expenditures representing
an estimated $1.7 trillion for 2006. The sale of homes is an important
economic indicator and consumer confidence barometer.
    RBC is the largest residential mortgage lender in Canada with more than
$91 billion in loans outstanding in 2005 and over 15 per cent of the Canadian
mortgage market. As the country's number one source of financial advice on
home ownership, consumer surveys are one way in which RBC provides insight to
Canadians about the marketplace in which they live.
    These are some of the findings of an RBC Financial Group poll conducted
by Ipsos Reid between January 18 and 24, 2006. The online survey is based on a
randomly selected representative sample of 2,001 adult Canadians. With a
representative sample of this size, the results are considered accurate to
within (+/-) 2.2 percentage points, 19 times out of 20, of what they would
have been had the entire adult Canadian population been polled. The margin of
error will be larger within regions and for other sub-groupings of the survey
population. These data results were statistically weighted to ensure the
sample's regional and age/sex composition reflects that of the actual Canadian
population according to the 2001 Census data.

    For full tabular results, please see the Ipsos-Reid website at
www.ipsos.ca.

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