For many Canadians, owning a home is more than just about having a place to live, it’s also an investment.

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For many Canadians, owning a home is more than just about having a place to live, it’s also an investment.

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The logic behind that view is simple: When purchasing a home, the payments you make toward your mortgage help you build equity on an asset that is, if everything goes well, only going to grow in value over time.

“Real estate has been traditionally something that continues to get higher in prices,” said Troy Couwenberghs, a broker and manager of Re/Max Advantage Realty Ltd. Brokerage in London.

“There’s dips that take place here and there when there’s recessions at times and, unfortunately, some people do get hurt with that, but if you’re in it for the long haul, you’re going to make money on it.”

But as home prices in the London area continue to rise – the average selling price of homes listed in February was $825,000 – entering the market is becoming increasingly hard for many.

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This doesn’t necessarily mean the end of people’s financial world, says Fred Masters, a licensed mortgage agent and financial advisor, who still considers housing “a great investment over the long term.”

“We have a societal issue around the fact we really view homeownership as kind of one of the goals in life,” he said.

“I think . . . this fear of missing out, this idea of FOMO, is alive and well in the real estate market.

“But if you put that aside and look at renting, renting is a fantastic move because all kinds of worries disappear,” Masters said.

Besides not having to think about which way interest rates may go – up in 2022 – people don’t have to worry about coming up with “a massive down payment to get into the market” or worry about repairs or maintaining a property.

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“Lots of people end up being house rich and cash poor,” Masters said.

“However, the other side of that equation, then, is that you must save aggressively for retirement because you’re not going to be able to fall back on the equity in your home.”

Then, there’s the issue of all the money that goes toward interest when paying off a mortgage.

With a minimum down payment on an $825,000 home, and mortgaging the rest at a fixed rate of 2.8 per cent for 25 years, a homeowner making monthly payments would pay about $300,000 in interest during the life of a mortgage.

However, if a person invested $1,000 a month during the same 25-year period, they would have save $300,000, and if invested at an annualized rate of four per cent, would have made a profit of about $204,000.

That’s why is important people focus on playing the long game, Masters said.

“Time is the most important piece,” he said. “The time to start is right now and you invest over the long term.

“We want to get rich quick, but I always talk about getting rich slow . . . This idea of auto-saving and investing for long-term growth and saving for retirement, I think it’s non-negotiable.”

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