In a previous article, Venture Cover discussed all about guaranteed investment certificates (GICs), mutual funds and stocks. All of these investments are great for saving up for retirement or your children’s education. But if you’re looking for a more tangible type of investment, putting your money into real estate is another viable option.
But there’s a big question that needs to be answered first – is it advisable to enter the market right now?
Why timing is key
Just like any other investment, understanding market trends in real estate is essential. The housing market in Canada has been on a hot streak for the past decade. The interest rates remained low even after the 2008 global financial crisis that affected the US and Europe significantly.
Market prices reached peak levels in 2017.
Then in 2018, the market saw a decline in the amount of homes being sold, with the national average sale price slumping by 4.9%. On average, homes across Canada sold for $472,000 after the decline.
What’s evident from the economic calendar on FXCM is that the Canadian housing market currently has low volatility, which means that prices aren’t likely to see any drastic declines or sudden increases anytime soon. Analysts predict that the housing market correction will continue throughout 2019.
It means that any market adjustments will be minimal, which can be taken as a huge positive. In Toronto, for instance, the Huffington Post reported that the local housing market is stabilizing, thanks in part to higher mortgage rates. The Ontario Fair Housing Plan took effect in April of 2017, which helped the city to gradually enter a balanced market.
Aside from Toronto, cities like Montreal and Vancouver remain stable and attractive to real estate investors. A lot of it has to do with the continuous development of the area both commercially and residentially.
But if you aren’t looking at living in a major city, there are smaller towns in Canada that present great investment opportunities. According to Vancouver Courier, the following towns in Western Canada are the newest real estate hotspots for 2019: Kitimat, Terrace, Abbotsford-Mission, Okotoks, and Leduc. What’s common among them is that there’s a lot of land available for industrial investment opportunities. Naturally, more jobs will be made available, opening up the chance for real estate developers to build more properties.
However, being a buyer at this time also means jumping through a series of hoops as mortgage regulations continue to tighten. Global News notes that stress tests are used as a way to predict whether borrowers will be able to cope with rising interest rates. You might not be able to borrow as much as you asked for, forcing you to ‘settle for a less expensive home’.
There’s no straightforward answer as to when is the perfect time to buy because it’s influenced by several uncontrollable factors. But by the way things are looking, the Canadian housing market isn’t expected to face anything serious like a crash anytime soon. If you can pass the stress test and choose a suitable and affordable property to buy, now may be as good a time as any to invest in real estate.