With high-end homes in Canada often selling for six-digits over their original asking prices, it might appear like the country’s relatively hot residential real estate market is yet another case of the rich get richer and the poor get poorer.
But a recent market analysis by Moody’s Analytics, based on numbers released by Statistics Canada, shows that lower income Canadians are getting more benefit than their wealthier neighbors from the real estate boom and homes for sale in markham, at least as a percentage of their overall wealth, if not in actual dollars.
While the Stats Can numbers, which cover a thirteen-year period from 1999 to 2012, show that the overall net worth of those in the country’s top 20% income bracket rose more than those in any other income bracket, real estate’s share of total wealth rose more for lower income Canadians than their higher-income counterparts.
Real estate comprises a higher portion of the total net worth of lower income Canadians than it does for higher income earners. The increase in residential real estate values over the time period analyzed has resulted in a 25% increase in the portion of net worth held in real estate holdings by lower income Canadians.
Conversely, wealthier Canadians only saw a 16% increase in the real estate portion of their net worth.
Much of the benefit that all Canadians enjoyed from the dramatic increases in residential real estate values over the 13 years of the analysis is based on how well the country’s economy performed throughout the financial crisis of 2008.
In the U.S., the average financial losses from the pre-2008 highs, to the post-2008 lows was about 25%, but Canada averaged only a 7% loss. The economic downturn lasted for over five years south of the border, while the Canadian economy bounced back after a year.