Over the last year, there has been several things the government has done to try to cool off our sizzling housing Market. We have had Ontario’s fair housing plan come out last April (which in fact did show a correction for several months). Since September 2017 there has also been three Interest rates hikes, and finally January 1st saw the implementation of new stress tests for mortgage qualifying, which means it is much more difficult to qualify for higher priced homes, and also more difficult to show that we are able to handle monthly expenses when purchasing a new home. However, If you look at the long-term dynamics of the Golden Horseshoe, in our opinion they far outweigh the pressures against the housing market, and may fuel property prices further ahead over at least the next decade.
To be a true investor, you need to know your key investment markets intimately, and also have a pulse on other markets (one good reason is you never know when you can be priced out of your own market and forced to move to others). We typically invest in Ontario’s Golden Horseshoe. This unfortunately does not include places like Toronto, Mississauga, Burlington, Oakville, Vaughan, or likely anything in the GTA (Greater Toronto Area). Once upon a time you could find properties that cash flowed in these areas, making them sound investments, unfortunately in today’s market you will be hard pressed to find an investment in the GTA that is not dependent on appreciation for you to profit.
As each of these cities were great investment opportunities many years ago, today our key markets are all outside the GTA. They include Hamilton (and the Niagara corridor), Barrie, Durham region, and Kitchener/Cambridge. We think the days are numbered for even these cities to be able to find cash flowing properties as well. This will likely push us even farther outside of the GTA in years to come. The reason for this is that for all our lifetimes (and likely our parents’ lifetime), the housing market has increased at a much faster rate than the rental market. So why has the Golden Horseshoe been a hot real estate market for decades? (and in our opinion, will continue to be hot)
See the attached map of the Golden Horseshoe. We see this region as fueling long term demand for housing and thus allowing Real Estate Investors to continue to invest. Below are just several of the reasons we think the Golden Horseshoe will continue to grow for years to come.
- IMMIGRATION: Canada has an immigration rate that doubles that of the United States per capita. We have nearly 400,000 people come to Canada each year and 25% of our population choose to live in the Golden Horseshoe. The immigration rate is also not decreasing but rather increasing. This indicator alone has a significant impact on our projections that the demand for housing will likely not decrease (the question is will there be enough supply?)
- TRANSPORTATION: Just Google GO transit and you will see the investment municipalities and the province are putting behind transportation. 8 new Go Stations in total, 4 along the Niagara region connecting Niagara Falls to Hamilton, and then another 4 in Durham Region Stretching out to Clarington. All of this within the next 10 years. This initiative makes the major business hub of Toronto very accessible to those living outside the GTA
- LAND SCARCITY: With a lake on one side, and Green Belt on the other, there is not an infinite amount of land to develop. 25% of our population choose to live in this pocket of land; as immigration continues and land becomes even more scarce, who do you think will benefit in the long run? (our bet is on those that own land and/or property in this region).
- LIMITED SUPPLY: With the population growing as fast as it is, and the implementation of Ontario’s fair housing act, there are simply not enough homes being built, and surely not enough rentals being produced. For proof of this, just google the vacancy rate virtually anywhere in the golden horseshoe and you will see it is in the low single digits – and still may decrease.
- CANADIAN DESIRABILITY: Canada is consistently among the top 3 best places to live on earth year-in year-out. It speaks for itself that our quality of life is desired by many that do not live here. In addition, Canada is also a place where foreigners want to invest their dollars for above average returns.
We are not economists, or planners, but just simple real estate investors. We analyze the numbers, to ensure our financials work on the investment properties we purchase, and then (through factual economic data) ensure those properties are located in areas that are poised for future growth. This is only the way we see things and we always encourage any of our partners and clients to not blindly trust what we say, but rather validate our assumptions. Much of the information we use is widely available on the internet.
We as investors, never rely on appreciation and speculation to get a good return on investment (ROI). In fact, we need to be prepared for housing prices to continue increase, or (more importantly) to decrease even for years at a time. However, if we were to bet on Housing in the Golden Horseshoe, our money would be on long-term growth.
Visit us at www.VenturePropertyInvestments.com and our pages on facebook or LinkedIn to learn more about how we invest in real estate to profit in both an increasing or decreasing housing market. Or contact us if you would like to learn how we are providing double digit returns for our partner’s and clients year over year.
Until Next Time,
If you haven’t come out to one of our events, feel free to visit our events page on our site at http://venturepropertyinvestments.com/events/. If you are just starting out, or a seasoned pro, come out to Learn and Network with others like you.
Martin Kuev & Chris Shebib are full time Real Estate Investors, Realtors and Wealth Coaches who have over 20 years experience in Real Estate. With multi-million-dollar real estate portfolios and a team built over the past decade, they left the corporate world to have the flexibility to spend time with family, continue their own real estate investments and help others build long-term wealth.
Both Chris & Martin are first and foremost Husbands, and Fathers. Both are actively involved with their families and each have 3 daughters keeping home life full of surprises.