Hitting the Real Estate Jackpot

2021 was another crazy year for the Canadian real estate market, and like most homeowners, our property experienced a significant increase in value. Like millions of Canadians before us, putting down roots in our community has yielded us lottery-like returns in just a short amount of time.

But what should be done with this newfound wealth, and how does it impact our plan for retirement? Read on to hear the details of our real estate windfall and my thoughts for the future.

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My Homeownership Journey

My wife and I began our journey to homeownership immediately after university. We always wanted to own a home of our own, and so we became singularly focused on saving up for a downpayment. Unfortunately, we lived in a pretty expensive area—a Vancouver suburb where properties regularly sold for over one million dollars—so we knew we had to save hard and work to increase our income.

Our budget when saving up for a down payment.

Eventually, after years of persistence and patience, we purchased a detached home in 2019 for $850,000. At the time, this seemed like an insane amount of money. But in all honestly, buying was a relief. We were so worried about being priced out by another run-up in prices, like what happened in the preceding years.

But unlike a lot of homeowners, we weren’t expecting much price appreciation. We thought that the market was already so inflated that it would be unlikely for our home to appreciate significantly in the short term. And when COVID happened, I was convinced that some steam would be let out of Canada’s real estate market.

Boy, was I wrong.

Property Assessment Jackpot

In B.C., our property assessments come out on January 1st, which is just in time for this post. And unlike the past couple of years, where home appreciation was modest, our 2021 assessment came in huge.

In total, our home appreciated by $283,000 in 2021.

That’s about seven times as much appreciation than the previous year when our home appreciated by $41,000. And many multiples more than our 2019 appreciation, which was a meagre $6,000.

And to be honest, this assessment doesn’t describe the actual value of our property as of today. That’s because the assessment authority in B.C. bases their valuation off of real estate values back in July. So if the market has appreciated since then, the assessment is somewhat undervaluing your home.

Return on Investment

In total our home has appreciated by $330,000 since we purchased it in 2019. This gives us a 40% return on the value of our home in just over two years.

But that 40% value doesn’t tell the whole story. The more interesting question is how much we gained on our original investment: our downpayment plus our closing costs.

If you’re familiar with my guide on closing costs, you’ll know that we spent just over $18,000 on closing costs when we purchased our home. This included property transfer tax, legal fees, and an inspection. If you add those closing costs to our downpayment, our initial investment in our home was $188,000.

That means our total return on investment is 175%!

Calculating our total return using our $188,000 original investment.

This is far higher than the 40% return I calculated earlier. That’s thanks to the power of leverage. We purchased our home with 20% down, which means any gain (or loss) we experienced in our home’s value would have its effect multiplied by five times, minus our closing costs.

This brief example shows you how easy it is for people to get rich off real estate in Canada. The power of leverage, and the consistent climb towards higher real estate prices, has made more millionaires in Canada than anything else.

Including Real Estate Appreciation in Net Worth

Since we’ve been in this home through 3 property assessments, it seems appropriate to start accounting for these increases when calculating our net worth. But how to do that?

It’s something I’ve been toying with for the past couple of months. My main concern is that I don’t want my net worth to “bounce around” a lot every year if the real estate market ends up being very volatile going forward.

Many other bloggers use the topline number from their assessment, while others take an average of recent comparable sales in their neighbourhood and the surrounding area.

The Lower Mainland of B.C. experienced huge increases in real-estate valuations in 2021.

I’m looking to be a bit more conservative—consistent with how I value our pension—and instead take the average of our last three property assessments. This will smooth out price volatility and give me a reliable figure to use when calculating our net worth.

So, that means the gain in our home’s value contributes $129,000 to our net worth. This average value is far less than the $330,000 gain we’ve experienced, but I feel it’s a more responsible number to use when planning my wife and I’s financial future.

If the real estate market is flat in 2022, the effect of this three-year rolling average means we’ll still experience a $108,000 gain in our net worth. That’s because the much lower 2019 assessment will “roll off”, and the new assessment will be included.

Looking Ahead

Obviously, this is a massive change in net worth for us, but what does it mean for our future? Well, we’re sticking to our plan to maximize our TFSA in 2022, and we’ll keep saving and investing as if nothing has changed.

It does help us in one aspect: my new year’s resolution to apply for a HELOC and use it for investing. I am still in the process of applying and learning more about HELOC products, but you can expect to see me write more about that topic in the near future.

Thanks for Reading

Are you interested in real estate? I recently wrote a few articles that you may be interested in. This includes my post on how to get cash back from your realtor and my post on Canada’s best REIT ETF. Consider giving those a read if you think they’ll help you on your financial journey! 

As always, please consider following me on social media or signing up for my newsletter if you’d like to be notified periodically (less than once per month) with a list of my recent articles.


  1. Congrats on the excellent return on your home, AL. The power of leverage is incredible. That is quite the story. I wish I had the same motivation to purchase a home when I finished school. Now I’m in the situation where I am hoping for a decline. Either way, I am hoping to buy a small home or condo within a year or two. Thanks for sharing your experience.

    1. Hey Graham! Yes, people often overlook the power of leverage when comparing real estate to regular stock or ETF investing. Having leverage really supercharges your return. Many buy with just 5% down as well, making their rate of return much higher than ours. Hopefully you can get into the market soon. It took us about 5 years of focused saving, but we could have done it much sooner if we went for a condo instead. Thanks for stopping by!

  2. Valuing your primary residence to include in your net worth can be tricky. If you’re using your net worth as your FI number then including your home has a huge impact because you need to live somewhere and probably aren’t going to liquidate that asset.

    The problem with increased property assessments is increased property taxes. We often hope for a lower valuation to save us on property taxes. The city’s assessment is also just an estimate and not always indicative of what your house would be worth if you sold it.

    1. Thanks for the great comment Maria! I totally agree that it’s veryyy tricky. It’s sort of why I also break down “liquid” vs “total” net worth in some of my charts.. Tells a much clearer picture that way. And with respect to liquidating: never say never! Probably the most FI-optimal move for anyone with a lot of home equity would be to downsize to a lower cost-of-living area. I’m not sure it’s in the cards for us, but it’s definitely something I think about!

      I do worry about increased property taxes. This go around, our home increased a few percentage points more than other homes in our city, so I expect to pay a little more this year.

      1. We’re in a similar position. Early in our FI journey, someone said to me that we essentially had won a golden ticket by owning Vancouver real estate. If we sold, we’d be instant millionaires and, if we moved to a lower-cost area, we could be FI on the spot.

        However, that wasn’t an option for us, given how close we are to our families and the deep roots we have in Vancouver. We’re stuck here for good!

        Thank goodness we discovered the Smith Manoeuvre/leveraged investing and were able to crystallize that equity and put it to work. I’m thrilled to hear you’re going to do that soon.

        I wish more people could learn about how to put their home equity to work (and be in a financial position to support this strategy). It could prevent so many from becoming house poor.

        1. I feel the same way. Both sides of our family are here so it’d be so hard to move away, whether it be for work or to “cash out” and move to a lower cost of living area.

          You’re so right about the Smith Manoeuvre. It is a total game changer for savvy home owners. It’s a great alternative to using leverage to buy rental properties.

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