Invest in Your Health, Your True Wealth
In December, I received a not so gentle reminder that you that your number one investment (outside of real estate 😉) is your health! In early December, my back went out of alignment, and it affected every part of my life and everything else became secondary. I was basically incapable of carrying on my normal activities for almost three weeks (I guess I am getting older…yikes!). The good news is that, after some focused and consistent help from professional practitioners, I am significantly better. “Your Health Is Your True Wealth” rang true to me.
As we are at the beginning of 2023, it is always a good time to take stock of what has happened in the real estate last year, and how you can benefit from this in the upcoming year. 2022 was anything but boring when it came to real estate. There were several key events that have set the groundwork for a continued and interesting 2023 real estate environment.
2022 A Year of Tremendous Change
The Bank of Canada raised the overnight lending interest rates seven times lifting the prime interest rate from 2.45% to 6.45% in only nine months. This led to a complete shock to the financial system across the country. The intent was to combat rapid inflation. The most significant change is that housing market sales tanked in key real estate markets across the country, prices also dropped in those frothy markets.
Source: RBC Economics Jan 2023
Most housing market conditions are now in a balanced position so that buyers have product and time to make informed decisions. This is a very good thing for everyone except for those speculators that thrive in the unsustainable and rapid growth appreciation conditions.
In 2022, affordability was at the top everyone’s mind and the various levels of Government were compelled to act. There were several Government policy announcements at both the federal and some provincial levels, such as a 2-year ban on foreign investors, a buyers’ cooling off period, and the removal of certain rent restrictions announced in BC to name just a few. I suspect more will be forthcoming in 2023.
With all the changes, there will be opportunities for those that are prepared. Look back to the financial crisis in 2008 and the resulting opportunities that so many investors took advantage of and are reaping the benefits.
Looking forward to 2023
I strongly believe that in most cases there is no need to rush into a deal unless it ticks ALL the RIGHT boxes for you. The talk of recession is in full swing, and we know that the Federal Government and the Bank of Canada is determined to reign in the continuing inflation with a target of 2% and are prepared to break things to do it because the results of not doing it will have an even more profoundly negative effect. Real estate is expecting to continue to drop in most markets across the country with some at a much greater level than others.
RBC research forecasts that further drops in housing prices for many Canadian housing markets, such as Vancouver, Toronto and Montreal for the near future will continue as sales numbers stabilizes.
It is going to takes some time for the impact from the rising interest rates, and from the trigger points in variable rate mortgages to be fully felt throughout various markets and that is where I believe the opportunities will present themselves.
Some provincial housing markets such as Alberta and some Atlantic provinces have and are expected to continue to benefit from the interprovincial migration and international immigration.
I believe the real estate opportunities are going to be in those markets that haven’t experienced crazy appreciation but have the right ingredients for a sustainable housing market. As I have mentioned over and over again, real estate is a function of the economy (lagging indicator) and is predominantly local. Here are a few questions to ask yourself if you considering buying or investing in real estate?
- Where are the sustainable jobs going to be?
- Where are the people moving to?
- What markets are affordable?
- What markets haven’t experienced frothy appreciation?
- Where can one financially get ahead i.e. disposable income?
I personally believe that Alberta and specifically Edmonton have the right ingredients for sustainable future real estate growth, which is why I chose to get my real estate license there.
So from our family to yours, Happy New Year! Please take care of your health (and yes my back is much better!) and I will be happy to take care of your real estate needs whether that is locally in Greater Vancouver, in Edmonton with my team, or through my Canadian and international professional connection.
If you would like to discuss current real estate conditions and brainstorm what would be the right course of action for you in this market, please feel free to book a meeting with me by clicking here.