Given all of the recent media attention on the growth of property prices in Toronto and Vancouver, it would be easy to assume that these were the top property investment markets in Canada over the last few years. The reality, however, is that most discussions of property returns overlook smaller cities and often neglect to consider the actual income component of returns, or what would have been generated from renting out the property. When factoring in the income potential and considering all Canadian cities over 100,000 (34 cities in all), our analysis found that Thunder Bay, Oshawa and Windsor represented the top cities for residential investors over the last 5 years.
Our study considered a hypothetical investment made in each of 34 markets in 2010 and exited in 2015. Returns assumed each investment carried a mortgage representing 80% of the purchase price at an interest rate of 3.5% and amortized over 25 years. Returns were considered on a pre-tax basis.
1) Thunder Bay, Ontario
| Estimated 5Y IRR | 42% |
| Estimated 5Y Cash-oh-Cash Multiple | 4.4x |
Thunder Bay, a city in NorthWestern Ontario with 121,596 in the Census Metropolitan Area topped our analysis of residential investment returns from 2010-2015. Thunder Bay saw both strong price appreciation, as well as high cap rates over the 5 year period.
2) Oshawa, Ontario
| Estimated 5Y IRR | 29% |
| Estimated 5Y Cash-oh-Cash Multiple | 3.4x |
Oshawa, a city East of Toronto with a population of 356,177 in the Census Metropolitan Area, came in 2nd in our study primarily based on price appreciation over the 5 year period. Cap rates (and income) were better than in larger Canadian cities such as Toronto, Calgary, and Vancouver but were considerably less than in cities like Thunder Bay and Windsor.
3) Windsor, Ontario
| Estimated 5Y IRR | 27% |
| Estimated 5Y Cash-oh-Cash Multiple | 2.8x |
Windsor, a city in SouthWestern Ontario directly south of Detroit with a population of 319,246 in the Census Metropolitan Area, took 3rd place in our analysis of 5 year investment returns. Windsor exhibited strong income generation potential over the study period, and relatively good growth in home prices, but not to the same levels of appreciation in both Thunder Bay and Oshawa.
Full Report
Full study results for 34 cities and methodology are provided in the report. Download a copy of the report: SpendTree Report – 5 Year Canadian Residential Real Estate Returns (2010-2015)
About SpendTree
SpendTree aims to change North American residential real estate investing by empowering individual investors with an easy to understand online tool that provides the relevant analyses to make better investment decisions. Utlizing a combination of user-generated and external data, the SpendTree tool can provide a more thorough analysis of investment properties than what most individual investors are used to. This includes metrics that most real estate investors are familiar with, but also provides capabilities that have generally been the domain of professional and more sophisticated investors such as detailed sensitivities, hold period analyses, pro-formas, and market benchmarking.