Single-family homes have been a stable and solid investment for many years. The demand for single-family homes continues to grow and remains an excellent investment for buyers despite mortgage rates currently almost double their 10-year average. Many experts believe that single-family homes are expected to outperform other property types in the long run—but why?
What Is a Single-Family Home?
As the name suggests, a single-family home is a residential property intended to house one family. Typically, single-family homes are detached, meaning that they are not connected to other homes. These homes also usually have more space, both on the inside and on the outside in the form of a backyard and garage.
Why Are Single-Family Homes a Good Investment?
What makes a single-family home a better investment than an apartment or condo? Though it can very on a case-by-case basis, typically single-family homes remain a very strong investment for the following reasons.
Low Supply, High Demand
Space is becoming a valuable commodity, especially in large populated cities such as Toronto and Vancouver. To accommodate more people, cities tend to build housing such as condos and apartments, making single-family homes less common. With many families, buyers, and renters consistently seeking out single-family homes, the demand remains high while supply tends to be low.Because the demand for these homes stays high, the appreciation value is very strong. This makes single-family homes an excellent long-term investment.
Easier Management
It’s generally easier to manage a single-family home as opposed to a multi-family property. You’ll be dealing with one group of tenants and therefore one unit, making repairs and general maintenance a little more manageable.Easier Financing
Not only is it easier to manage a single-family home, but they tend to be easier to finance as well. Lenders often see single-family homes as less risky, meaning qualified buyers can enjoy more favourable mortgage terms.
Flexible Rental Options
When it comes to renting out a single-family home, you have a few options. If you want to remain more hands-off then you can lease to long-term tenants that will stay in the home for a longer period. If you prefer short-term rentals, you can use platforms like Airbnb and take advantage of favourable market conditions.Resale Value
Single-family homes retain a very strong resale value due to the demand, making them a valuable asset in the real estate market.Tax Benefits
You may find several tax advantages to owning a single-family home, such as deductions for mortgage interest, property tax, and some maintenance expenses. Taking advantage of these tax benefits can make investing in a single-family home an even more viable option.Investing in a single-family home can be a great opportunity in today’s real estate market. Talk to a mortgage advisor and Realtor® to see if purchasing a single-family home is the right move for you.
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