Buying and owning a house is often considered a significant financial investment and a milestone in personal wealth building. However, economist Peter Schiff believes that this notion is simply not true.
During a recent appearance on the Iced Coffee Hour podcast, hosted by Graham Stephan and Jack Selby, Schiff was asked about the common belief that for many, a house represents their primary means of saving.
Schiff, who runs Euro Pacific Capital, strongly disagrees with this perspective.
“A house depletes your savings. It’s a money pit,” he stated bluntly. “It’s crazy the amount of money that a house costs you.”
Proponents of homeownership often argue that property values appreciate over time. For example, the median sales price of houses sold in Canada in May 2020 was $544,000, according to data from Trading Economics. By May 2025, this figure had risen to $691,000, reflecting a 27% increase — however, this is a decrease from the recent high witnessed in February 2022, where the average home price bloated to $837,000.
Yet, Schiff urges caution when interpreting these figures.
“[People] think, oh, the house appreciates — not always, it’s inflation that’s doing it. And all that’s happening is your land is keeping pace, but houses don’t,” he argued.
From $500,000 to $1 million?
Given the rise in Canadian home prices over the years, if you bought a house many years ago and sell it today, chances are you will receive more than the purchase price.
However, Schiff cautions that such examples often have significant caveats.
“Even if somebody tells you, ‘Oh, here’s this house that I sold for $1 million and I bought it, whatever 10, 20 years ago for $500,000.’ If you think about all the money they put into that house over that period of time, they may not have made any money,” he said.
He explained that houses can require significant upgrades, which can be costly.
“A lot of the houses too that were bought back then, if you don’t redo the kitchens, redo the bathroom, put on a new roof, you know, your audio, visual systems are all obsolete, the wiring — a lot of stuff has to be brought up to date in order to sell it for the million dollars,” he said.
He added that many of these houses, if not updated over the years, would be considered teardowns.
“A teardown means a house that was once brand new and had a lot of value, now has zero value. It’s going to be torn down. The only thing that has value is the land itself. The house is worthless,” he said.
Buying vs renting
The decision between buying and renting a home depends on a variety of factors, such as financial circumstances, lifestyle preferences, market conditions and interest rates.
Schiff acknowledged the individual nature of this choice but believes that for many, one option stands out.
“It depends on your circumstances and where the home is located, but for a lot of people — and this has been the case for a long time — renting is a better option,” he stated. He said money saved this way should be invested.
He also criticized government policies for distorting the housing market with tax incentives, something that is echoed by Canadians for Tax Fairness.
"The increasing financialization of housing has contributed to the affordability crisis, and is exacerbated by preferential tax treatment for capital gains and real estate investment trusts (REITs)," the non-profit noted.
Schiff also pointed out how interest rates are a factor that is greatly skewing the market. He said, “A lot of people are better off renting. A lot of people who own homes, the only reason they’re better off staying where they are is because their mortgage rate is so low, their mortgage rate may be so low that if they sold their home and rent it, their rent would be higher than what their current mortgage is.”
He also emphasized that homeowners are responsible for maintenance, insurance and property taxes, and noted how these costs have been sharply rising.
Although experiencing fluctuations, mortgage rates have indeed risen sharply over the last decade. In June 2015, the average prime mortgage rate was around 2.85%. As of June 2025, it stands at 4.95%, according to <ahref="#rate">Ratehub.
Elevated home prices, along with high interest rates, can make purchasing a house unaffordable for many. However, if you’re interested in investing in income-producing real estate, there are alternatives to buying a house, such as real estate investment trusts (REITs) and crowdfunding platforms.
Sources
1. Trading Economics: Canada Average House Prices
2. Canadians for Tax Fairness: How tax breaks are worsening Canada’s housing affordability crisis, by Silas Xuereb (Sept 23, 2024)
3. Ratehub: Mortgage Rate History Canada
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
