All the Numbers

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Home prices over time

Nobody knows what a home will be worth in ten years. The plan still needs a number, because the home's value sets what a sale brings in, what property tax costs, and how much a home equity line can borrow.

The rule

The default assumption is 3.5% a year, nominal. It is built from PWL Capital's expectations for a personal residence: a 1% a year return above inflation, plus its 2.5% inflation expectation (see inflation and today's dollars). PWL states the residence return in real terms; the two are added, not compounded, which gives 3.5% rather than 3.525%.

Until 26 September 2026 the default was 2%, the Bank of Canada's inflation target, which means no real growth.

The figure is for the typical home over decades. A single home is far more variable: PWL puts the yearly volatility of an individual Canadian home at 14.7%, of which 4.2 points come from the market and 10.5 from the particular property.

What the engine does

  • Starts a home at its purchase price and grows it at the rate set for that home, compounding smoothly through the year.
  • Uses that value for a sale, for property tax, which grows with the home's value (see what a house costs to hold), and as the limit on borrowing against the home in a short plan.
  • Lets the rate be changed for each home.
  • In the Simulation view, draws a different growth rate for each year around the assumption, using the volatility above, with each home drawn independently of the markets. See Monte Carlo.

What it deliberately does not

  • Treat the figure as a forecast or an appraisal. It is labelled as an assumption wherever it is used.
  • Differ by city, neighbourhood or type of home.
  • Follow a market cycle. Outside the Simulation view, value grows at a steady rate.
  • Link home values to the investment markets; no correlation is available to use.
  • Tie rent to home prices. Rent has its own growth rate; see rent.

Connected to

  • "Monte Carlo: many market histories" · The Simulation page runs the plan 500 times with investment returns and home prices drawn at random each year, then shows the spread of net worth and how many runs finish, borrow or run out of money.
  • Inflation and today's dollars · The default inflation rate is 2.5% a year. A future dollar amount can be shown as is, or divided by (1 + inflation) for each year to show what it would buy today.
  • Net worth, as the plan counts it · Net worth is everything the plan holds (cash, investment and registered accounts, homes at market value) minus mortgages, credit lines, debts and tax owing. It is not reduced for selling costs or for tax on money still in an RRSP.
  • Rent, and when it stops · Rent is its own line in the plan rather than part of living expenses, and it stops the month your first home closes — because a household that has bought is not paying both. Give it an end date if you would keep renting past that.
  • Renting out part of your home · Suite income is taxable and its expenses are deductible on the rented portion, but renting can also limit the principal-residence exemption on the eventual sale. The planner assumes the rental use stays ancillary, so the whole gain on a sale stays exempt, and says it assumed so.
  • Selling a home · A sale turns the home's projected market value into cash after selling costs of 5.8% and the mortgage payout. The gain on a principal residence is exempt from tax, apart from the part that was rented out when the exemption does not cover it.
  • What a house costs to hold · Property tax, maintenance, insurance and utilities are estimated as rates against the home's value, with sourced defaults. Property tax then grows with the home while the rest grow with inflation.
  • When the plan runs short of cash · When a month needs more money than the plan has, it draws savings in a set order, then borrows on a home equity line at 5.13% and an unsecured line at 8.38%, as far as a lender would lend. When no lender would lend more, the projection stops.

Sources