Canada’s real estate market typically experiences the beginning of its busiest period of the year between the end of March and the beginning of April. During this period, many real estate owners begin sprucing up their homes and investment properties to make them more appealing to buyers.
This year, however, a slow real estate market and a bitter winter may mean buyers are at a particular advantage this season.
A look at the data
February was one of the slowest months in over a decade; data recently released by the Canadian Real Estate Association shows that sales fell in 75 percent of the nation’s markets.
Some of the nation’s strongest markets are experiencing periods of stabilization, which is manifesting in lower prices and slowing sales. In 2018, average sale prices in Toronto fell by 4.3 percent, according to real estate agency Gord Collins. This follows a decade of record-breaking growth in the Greater Toronto Area (GTA) real estate market.
Additionally, rising real estate prices, more stringent lending regulations and higher mortgage rates are all contributing to the slowing market nationwide.
This year, many analysts expect prices to continue appreciating in traditionally lower-cost markets, like Ottawa and Montréal.
Savvy real estate investors can take advantage of the ongoing changes in Canada’s real estate market. In spite of falling prices and stabilizing inventory, many sub-markets nationwide are continuing to show strong signs of growth, and the nation’s job market continues to grow. The nationwide unemployment rate currently hovers at just 5.8 percent.
This means 2019 may be the perfect year for many investors to begin acquiring value in Canada’s real estate market.
Markets to watch in 2019
Real estate in the GTA and the rest of Ontario—which accounts for 40 percent of Canada’s population—is currently suffering from a dearth of supply. Both residential and commercial sellers are able to command high prices thanks to a shortage of available buildings. Coupled with growing tensions with the United States over trade disputes, many worry about the potential for a market collapse in Toronto.
British Columbia is experiencing a similar set of challenges. A growing population, coupled with high amounts of foreign investment, is making the Vancouver Metro area more inaccessible and less affordable.
Government regulations in both Toronto and British Columbia, designed to lower the regions’ respective costs of living, are in fact exacerbating many problems and further restricting the construction of new housing units. While these markets are showing signs of stress, it’s unlikely either will experience a catastrophic crash this year.
Montréal, meanwhile, is showing signs of continued growth. Improving political stability in Québec, thanks to the leadership of the Coalition Avenir Québec (CAQ) government, is leading to stronger investor confidence in Le Belle Province. Gord Collins reports that metrics measuring both prices and sales in Montréal show more than 47 months of consecutive growth. This represents the first time the Montréal market has outshone Toronto and Vancouver since 1998!
The National Capital Region, which includes Ottawa and Gatineau, Québec, in March experienced a drop of nearly 9 percent in terms of total sales compared to this time last year, according to the Canadian Real Estate Association. Strong immigration to the region, however, coupled with relatively low prices, indicates the market is likely to rebound this year.
Prices in Western Canada are continuing to cool, though not as drastically as they are in the GTA. Calgary’s dependence on the oil and gas industry means its job market and its real estate market are both susceptible to dramatic swings. In 2018, falling demand for Canadian energy products led to lower prices throughout the Calgary market. A February report from the Calgary Herald, however, indicates 2019 could be a year of improvement in the Calgary real estate market.
There are also a number of technological shifts driving change in Canada’s real estate market. These developments are pushing investors, developers and tenants alike to adapt new habits when it comes to their approach to the real estate market.
Learning how these technological changes impact your investment strategies will help you determine which types of technology you need to emphasize. Here are some of the foremost technological changes worth paying attention to in Canada’s real estate market:
•Electronic and blockchain transactions: The way real estate transactions in Canada and beyond are performed are making it easier than ever to begin investing in real estate. Today, blockchain technology is transforming the way real estate transactions are performing, leading to more transparency in the industry and creating incentives for sellers and buyers to operate on a more level playing field.
•Data-driven decision making: As an investor, it’s important to always make data-driven decisions when investing in real estate. Thanks to improvements in the tech sector, it’s becoming easier than ever to see large swaths of data, broken down into aggregate that’s easy to understand. Exploring the most recent data tools can help you make the most of your real estate investment budget.
•Integrated resident experiences: Today, both commercial and residential tenants are looking for ways to integrate their technologically driven lifestyles with the spaces in which they live, work and play. As an investor, you can stay ahead of the curve by investing in smart building technology at your rental properties. Tools like smart thermostats are a boon to both yourself and residents, because they save energy and reduce operating expenses.
Additionally, the presence of technology hubs and clusters in cities like Vancouver and Montréal are having an outsized effect on their respective real estate markets. While the growth of Montréal’s artificial intelligence (AI) sector is helping revitalize the region’s economy, a large tech presence in Vancouver is further restricting an already short-supplied housing market.
The real estate market is an ever-changing entity that can be difficult to master. With the right training and a detail-oriented attitude, it’s possible to make strategic investment decisions that allow you to generate plenty of passive income and maximize your earning potential.