Just look at history, and you’ll see that when things go down, they eventually go up again. And frankly, we have it in our power as individuals to affect the economy. One way is to purchase a new home if you’re thinking of moving or entering the market for the first time.
Economists and the media respond to what we as individuals do as consumers, and new home sales do a lot more than show faith in our cities, provinces and our country. For example according to BILD, the new home-building and professional renovation industries form a major engine of economic growth in the Greater Toronto Area. In 2011, the data confirmed that these industries created 193,300 jobs in new home construction, renovation and related fields, making them one of the largest employers in the region. They paid $10.1 billion in wages, which of course, translates to a lot of purchases across the entire economy.
It’s also important to be careful about where you put your money. I’m amazed at how many people trust their hard-earned income to complete strangers in an industry they have no control over. Financial advisors are fine, but remember, they make money when you buy and then sell. None of them has a magic button that will turn your nest egg into gold. If they tell you otherwise, run. Take control over your own destiny.
Historically, real estate has proven to be a good investment in the long run, even with the occasional dips in the economy. In addition, these industries provided $24.6 billion in investment value, the largest single wealth-builder for many families in the GTA. I’ve seen a lot of changes in the 45 years I’ve worked in the industry, and I can tell you that if you purchase a home to live in, you can ride out any economic storms and dips.
Just ask immigrants who have come here for a better life and worked our backsides off to build our nest eggs and buy homes. Some people like to gamble with their savings, and it may pay off. But one of the wonderful things about buying a home is that traditionally, values go up over time. On top of that, everything you earn in profits from the resale of your home is tax free.
A lot also depends on how you were raised and your family’s attitude toward money. I grew up in a poor dockside area of Glasgow during the Second World War. I learned early on to work hard and respect money. I got my first job when I was 12, delivering groceries. I remember that in those days we used to keep the shoe boxes and fashion insoles with the cardboard to keep our shoes going. The first things I ever bought with my own money were a new suit and a new pair of leather-soled shoes. We walked everywhere, and it rains often in Glasgow, so leather soles wouldn’t need to be repaired as often. Even then, I was practical.
The best financial advice I ever got was to leave Scotland and emigrate to Canada. I made some wise choices in the partners I teamed up with, and I’m grateful for the way things have gone. Of course, money and success are not the same thing. There are a lot of people who are considered successful, but who are not happy. I also know people who have very little but are very happy. Some lucky ones enjoy success and happiness.
The bottom line is — in any economy, understand what you are buying, whether it’s a pair of shoes or a new home. Do your homework, take your time and think it through. And remember that nothing says ‘I have faith in Canada’ like purchasing a home here. It’s good for everyone.
– Hugh Heron is Principal and Partner in the Heron Group of Companies and President of Heathwood Homes, as well as a former Member of the Board of Directors of Canada Mortgage and Housing Corporation, and a Past President of the Toronto Home Builders’ Association and the Ontario Home Builders’ Association.