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Assume
No Increase In Market Value Of Property End Of 10 Years |
Assume 20% Increase In Market Value Of
Property End Of 10 Years |
Assume 30% Increase In Market Value Of
Property At 10 Years |
Assume 40% Increase In Market Value Of
Property At 10 Years |
Assume 20% Decrease In Market Value Of
Property At 10 Years |
Assume 50% Decrease In Market Value Of
Property At 10 Years |
| Property Purchase Price |
% Down |
Original Investment |
Year |
Mortgage |
Mortgage Rate 5-year term bi-weekly payments |
Principal Paid in 1st 5-year term 25 year
amortization |
Principal Paid in 2nd 5-year term 20 year
amortization |
% Of Mortgage Paid Down |
Dollar Value Of Your Investment After 10 Years |
% Value Of Your Original Investment After 10 Years |
Dollar Value Of Your Investment After 10 Years |
% Value Of Your Original Investment After 10 Years |
Dollar Value Of Your Investment After 10 Years |
% Value Of Your Original Investment After 10 Years |
Dollar Value Of Your Investment After 10 Years |
% Value Of Your Original Investment After 10 Years |
Dollar Value Of Your Investment After 10 Years |
% Value Of Your Original Investment After 10 Years |
Dollar Value Of Your Investment After 10 Years |
% Value Of Your Original Investment After 10 Years |
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| $1,920,000 |
0.20 |
$384,000 |
1 to 5 |
$1,536,000 |
0.05 |
$176,524 |
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11.49% |
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6 to 10 |
$1,359,476 |
0.05 |
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$225,967 |
14.71% |
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end of 10 |
$1,133,509 |
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26.20% |
$786,491 |
205% |
$1,170,491 |
305% |
$1,362,491 |
355% |
$1,554,491 |
405% |
$402,491 |
105% |
$(173,509) |
-45% |
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| Is it true that real estate
doubles in value every 15 years in Canada? |
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| Data from TD Financial Group
suggests that this is true in a report from 2006. |
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20% increase in value of a property in 10
years equals about a 1.9% increase compounded annually |
30% increase in value of a property in 10
years equals about a 2.6% increase compounded annually |
40% increase in value of a property in 10
years equals about a 3.4% increase compounded annually |
Assuming the house value stayed steady
after losing 20% over the first 10 years and was worth 80% of its original
value after 25 years, you would own a building worth exactly 4 times your
original investment. (1,920,000x80%=1,536,000. This is exactly 4 times the
original investment of $384,000) |
Assuming the house value stayed steady
after losing 50% over the first 10 years and was worth 50% of its original
value after 25 years, you would own a building worth exactly 2.5 times your
original investment. (1,920,000x50%=960,000. This is exactly 2.5 times the
original investment of $384,000) |
| In this report they concluded
that the average annual increase in house prices for the past 25 years, |
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| namely the period 1981-2006,
was 5.6% per annum. Since this period of time contained a major |
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| housing price contraction,
and we are also in one currently, it can be said that |
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| 5% per annum is a reasonable,
conservative assumption for an average 15 year period. |
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| At the end of next 10 year
period we predict growth to have averaged out at 3-4% per annum. |
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| While the TD report was based
on resale house prices and not resale apartment buildings, |
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| it is nevertheless reasonable
data to use in the absence of more specific data. |
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(All of the above increase scenarios of
increases in property value are FAR BELOW the 5% per annum 25-year average
for Canadian home resales, making them conservative, real world scenarios) |
| If anything, with apartment
building values driven by stable, inflation-proof growth over time, |
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| they exhibit less fluctuation
according economic cycles. |
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http://www.td.com/economics/special/ca0906_home_prices.jsp |
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| At 5% compounded annually,
does real estate double in value every 15 years? |
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| $100 compounded 5% annually, 15 years
growth = $207.89 :This equals a 208% increase in value |
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