So the Canadian real estate seems to be gaining ground, right at the same time the Healthcare of Ontario Pension Plan (HOOPP) made a surprising revelation: Canadians are banking on home ownership to drive their retirements. This notion has some logic to it, but that did not bode well for the iShares S&P / TSX Capped REIT Index fund (TSE:XRE) as it slipped fractionally in Tuesday morning’s trading.
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The HOOPP study found that 62% of Canadians were looking to use the sale of their home to put extra punch into their retirement, calling it a “…key part of their retirement strategy, either as a financial investment or as a source of stability in retirement.” Half of that idea, of course, depends on there being a worthwhile home selling market to begin with. The other half, though—having a paid-for place to live—does make some sense on its own merits.
But, perhaps worse, 38% of respondents in that survey back in 2023 noted that they were “depending on the sale of their home to put a retirement fund in place.” That number jumped to 42% in 2024, and now, stands at 44%. HOOPP also found that a third of homeowners were prepared to remortgage their homes in a bid to fund retirement, a strategy which is somewhat less certain than it once was.
The Market’s Gains
This news comes at an odd time for the Canadian economy as a whole; the TSX composite has been on an upward run that is impressive by any standards. Reports note that, just this month, the TSX managed to hit a record high. Thus the notion of putting a lot of stock in a house to fund retirement does almost seem like missing out, at least, for now.
There is of course value in owning your own home in retirement. Your retirement needs fall off precipitously if you take rent out of the equation, and deal only with utility bills plus property taxes and occasional repairs. But, not surprisingly, the equation complicates the second you introduce anything like a legacy into the picture, or a major market upheaval. There may not be any one plan that is right for everyone, but with a growing majority of Canadians piling into home ownership as the key part of that plan, there are likely unintended consequences that follow.
Is the iShares S&P / TSX Capped REIT Index ETF a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:XRE shares based on 12 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 8.39% rally in its share price over the past year, the average TSE:XRE price target of C$17.37 per share implies 11.67% upside potential.
See more TSE:XRE analyst ratings
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