Canadian Real Estate Investing 101 - Is It a Better Place to Invest in Real Estate Than The Rest of the World?

As an active participant in the Canadian real estate investing market, you likely spend most of your days concerned with the rules and regulations, the up-and-coming trends and the far-flung future of your local market. You might even have your attention focused solely on one specific neighbourhood in Canada. That’s how a significant portion of real estate investors in Canada spend their time: hyper-focused and ready to jump on opportunities.

Of course, every once in a while, the savvy investor knows that it is essential to step back and take a look at the broader picture. In other words, how does real estate investment in Canada stack up against the rest of the world? The answer is a bit of a mixed bag.

So, if you are interested in getting started in Canadian real estate investing, we want to help support you by offering a free strategy call. During this call we can discuss your financing options, investment strategies and more in order to help you build a roadmap to long-term real estate success.

All you need to do in order to take advantage of this opportunity is click the link below and schedule your call with our team.

Canadian Real Estate Investing is More Costly

Let’s kick things off with one of the most critical metrics in the real estate market: the average cost of a home. In Canada, the average value of a home from province to province is about $700,000 as of the end of 2022. That’s pretty high in the grand scheme of things.

  • In the United States, the average cost of a home is roughly USD 226,000 ($310,000).
  • In the United Kingdom, £235,000 ($359,000) will net you a nice home.
  • French homes average £160,000 ($245,000).
  • In Indian cities, a home will cost north of 7 million rupees ($139,000).
  • A home in beautiful Beijing costs about USD 310,000 ($422,000).

Those prices will shift considerably depending on whether you are looking at an urban area. It will also vary significantly from province to province. A home in Vancouver runs north of a million dollars. The average cost of a home in Regina is roughly a quarter of that.

Skyrocketing Home Prices

In addition to the relatively high cost of a home, the Canadian housing market is witnessing a rapid increase in those costs year after year. Across the country, builders are having issues keeping up with the demand for new houses. As a result, the cost of a home rose more than 56% between 2008 and 2018. Compare that to the United States, which saw just a 24% housing price increase during the same period. The dramatic rise in housing prices has not abated since 2018. Indeed, before the onset of the novel coronavirus, the average cost of a home was expected to rise as much as 4 percent in 2020.

Some housing experts warn that the last decade-long phenomenon is a bubble that will eventually pop if the nation continues its course. For the moment, however, demand is extremely high and home prices are soaring. In other words, investors with the capital to invest now could see a substantial increase in the value of their property.

Of course, with the potential for great profits also does come at a cost. As home prices skyrocket, the barrier for entry will continue to climb. This means that unless the market corrects itself in a massive way, people who choose to wait are likely to get priced-out of Canadian real estate investing for quite some time.

Discover How To Buy Unlimited Rental Properties With This Step By Step Guide

Canadian Real Estate Investing

Be Cautious of Overvaluation

When you’re getting started in real estate investment, one of the fundamental rules is never to pay more for a property than it is worth. It sounds obvious, but in real estate markets throughout Canada, overvaluation of home prices is a real problem. Not only is it causing issues with a lot of younger home buyers, but it makes getting into the investment game more challenging.

Every year, global investment banking company UBS surveys housing markets that are in danger of hitting a bubble. This year, Toronto turned up at number two, based on “low rates and supply shortages.” The people of Toronto have likely seen this change in action. Housing costs tripled between 2000 and 2017.

Vancouver showed up at number 6 on UBS’ list. Experts regularly target Vancouver as a potential real estate trouble spot. In 2019, the province was number 6 on the Swiss Bank’s troubled housing index.

Overvaluation in Canadian real estate can be difficult to spot because in a market with properties that sell for over $700,000 in practically no time at all, it is a lot easier for sellers with less-valuable assets to try to push them through the system at over-inflated prices. So, in order to protect yourself it is key that you still take the time to property assess properties and have them inspected prior to buying them.

The Canadian Real Estate Investing Industry Looks Strong

All of the above may have sounded a bit doom and gloom. Still, the truth is that even those financial insiders who predict the worst for real estate markets in Canada acknowledge that the industry has a lot going in its favour, due primarily to three factors.

First and foremost, banks across the country are making it easier to secure a mortgage for first-time homeowners. This strategy has increased the number of available buyers who can reasonably get the money they need to buy your property.

Number two, it isn’t easy to build new homes anywhere in Canada compared to countries throughout the rest of the world. Either space is in short supply, or local regulations keep new construction intentionally slow. The result is the same: supply isn’t rising fast enough to meet demand.

Finally, some financial analysts believe that the damage has been done. As one explained, “a turnaround is unlikely for now, especially as [real estate] prices are still 75 percent higher than a decade ago.”

The Global Appeal of Canadian Real Estate Investing

While the value of our country's real estate market has been no secret to Canadian real estate investors, in recent years the rest of the world has begun to catch on to the trend.

In fact, the global demand for Canadian real estate in the form of housing has triggered the government to impose a two-year ban on foreign homebuying in most cases.

While this ban does not extend to many smaller municipalities, commercial property or residential properties with four or more units, when it comes to some of the best places to invest in real estate Canada has been forced to essentially close the door in order to create room for it's own residents to take part in the Canadian real estate investing market.

In order to support local investors who want to get into real estate investing Canada course-corrected the marked with the hopes that these next two years will make a large enough difference to re-open our market to international investment.

It’s Easy Enough to Get Into Canadian Real Estate Investing

Despite the potentially steep cost of entry, the Canadian real estate investing market is still rewarding. The country applies several tax incentives for those people who own property. The tax breaks are indeed better for those people who live in the properties they occupy, but there are several ways to take advantage of the nation’s liberal tax law.

If you’re concerned about the cost to acquire property, there are also several strategies that you can employ to get in on the action even as you save up enough to break out on your own. Real estate investment trusts allow you to buy a stake in companies that invest in a wide variety of real estate assets. Asset-sharing strategies will enable you to pool your capital with like-minded investors. Some investors find enough start-up capital by renting out a room in their home.

As you save up your money and dip your toe into the industry, the most important thing to do is keep reading, keep researching and keep learning about the ins and outs of real estate in Canada.

Finance Your Canadian Real Estate Investments Today

If you are interested in Canadian real estate investing, the first thing you are going to need for any investment property is money. This means locking down strong mortgage financing from an lender that understands the complications that come with Canadian real estate investing.

That is why at LendCity, we want to offer you a free strategy call with our team in order to help you develop a plan to cement yourself in our incredible investment market. So, if you you would like to begin real estate investing in Canada book your call today at the link below.

How Does Canadian Real Estate Investing Stack Against The Rest of The World? With Scott Dillingham