Based on this thread, I wanted to see, locally, how real estate has appreciated net of inflation and compared to stock market increases (how often was it better to have real estate than stocks?)
My cheating shortcuts
I used net of inflation to sorta - kinda approximate the drag that higher mortgage interest rates would have, and I did not compare to actual stock market returns, just a target rate of 5-6%, net of inflation, net sale (assuming realtor commission is 6%).
I assumed maintenance and taxes were a function of the expenses to live there or use it as a rental business., e.g., i excluded these costs. I assume that rental income versus expenses is BUSINESS income, that you work for, not investment.
Looked at average increases over rolling 5, 7, 15 year periods.
The DATA:
House data for Greater Vancouver, HCOL with outrageous prices today... and CPI for British Columbia, which is lower than Canada's average --
Years -- Jan 1979 to Jan 2017. (interesting fact, home prices doubled in 1981, were flat for 8 years from 1993, but that doesn't get a lot of press)
Year 2017 value is $1.6 Million; Year 1979 value is $68,200. So an impressive run up in value in 38 years.
Result
60% of the time, home ownership returned at least 6% annually to the homeowner, net of inflation. Sometimes a lot more: 1 out of 7 years, the 5 year return exceeded 15% annually, net of inflation.. However, 1 in 6 years the 5 year appreciation was actually negative.
TLDR
This means that in the 1980's through today, more than half the time, owning a home for 5 or more years would have beaten the long term average stock market real returns. Buying property within a year or two of a sudden dip appears to be the primary driver of returns, especially if it is held deliberately until a minimum annual target increase is achieved (need to hold between 5 and 19 years).
I was honestly expecting a much better frequency of success by owning real estate in Vancouver from 1978 to today.