Canadian Stocks Beat Vancouver Real Estate (1994-2016)

Ask this question on the street. 

What has performed better, Canadian stocks (as measured by the S&P/TSX Composite Index) or single-family homes in Vancouver, B.C.?

Few people on Canadian streets would pause to answer. They would say Vancouver real estate.  It’s a rocket. 

If you caught a ride on the average Vancouver home, your assets would have soared.  In 2015, Global News referenced real estate prices using data from the Real Estate Board of Greater Vancouver.

In 1994, the average detached Vancouver home sold for $368,800.  In 2015, it increased to $1,826,541.  By 2016, it had slipped to $1,470,265.  But that’s still a massive gain of 299 percent over 22 years.

You might be surprised how the stock market has performed. If you could have invested $368,800 in the S&P/TSX Composite Index on January 1, 1994, it would have grown to $2,006, 272 by December 31, 2016.

If you had invested $368,800 in Vanguard’s S&P 500 Index the money would have grown to $2,716,520 by December 31, 2016.

I’m not suggesting that stocks were necessarily a better investment over the past 22 years.  Investors can borrow to buy real estate and leverage their gains.  They can also rent their properties, creating cash flow in the process.

But anyone who kept a cool head, kept investment fees low and invested regular sums over the past 22 years in the stock market would have done a whole lot better than most people think. 

If you are interested in building a portfolio of index funds, check out the second edition of my bestselling book, Millionaire Teacher (Wiley 2017).

Vancouver Single Family Home Prices versus Canadian and U.S. Stocks

Sources: Real Estate Board of Greater Vancouver; S&P/TSX Composite Index and S&P 500 including dividends reinvested

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