73% of Canadians Say Real Estate is the Best Investment

Compared to the rest of the world, Canada remains one of the wealthiest and most affluent countries on the planet. Additionally, three-quarters of Canadian citizens say the best long-term investment to enhance their personal wealth lies in real estate.

The findings come from a new poll issued by RE/MAX Canada on the outlook for Canadian housing in 2024. Inferring calculations from submitted results, pollsters determined that the national average residential price for listed real estate will rise by 0.5% in 2024. Additionally, they determined that:

• 41% of real estate surveyors predict a more balanced market in 2024
• 28% expect market conditions to favour sellers
• 21% expect market conditions to favour buyers
• 4% anticipate mixed results in the real estate market

There is also an abundance of regional data that identifies prime investment opportunities for real estate investors in specific pockets of the country. Let’s analyze some of these findings and craft an action plan for how to build your real estate portfolio.

2023 was defined by rapid interest rate hikes

Before we delve into the promising data of 2024, let’s first look back at the trends that drove real estate and investment activity throughout 2023.

If there was one thing that defined the Canadian housing market in 2023, it was the impact of higher interest rates imposed by the Bank of Canada. While there’s still an incentive for investors to buy real estate amid higher interest rates, lower borrowing costs equate to more money in an investor’s pocket.

Consumer confidence in real estate investing remains firm

Despite affordability challenges, Canadians largely remain convinced that real estate investing is a prudent fiscal strategy. As the Bank of Canada signals that its aggressive interest rate hikes may be a thing of the past, investors look forward to more stable — potentially less expensive — financing options in the year ahead.

Additionally, according to the RE/MAX poll, 54% of Canadians remain somewhat concerned about the impact of interest rates on real estate investment plans. However, 73% of survey participants perceive real estate investments to be the best financial investment in their portfolio.

There’s also a generational divide over concerns about high-interest rates. Millennials and Gen Z investors are more likely to worry about the impact of interest rates on financing options, with 73% of young investors admitting to these concerns. Older investors are less likely to fear future actions taken by the Bank of Canada.

What trends shape how Canadians view real estate as the best investment

Now, let’s look ahead at some of the biggest trends investors admit will impact their investment strategies in 2024. The RE/MAX poll summarized surveyed real estate investors’ thoughts and feelings about how market conditions in the year ahead will influence their investment decisions.

In summary, most investors would be wise to adhere to these three key trends:

1. Incorporate climate change into your investment strategy
2. Concentrate investment opportunities in select regions of the country
3. Invest in neighbourhoods with perceived high-value and popular amenities 

Let’s now dive into more detail on each of these three key investment trends

1. The impact of climate change on real estate investing

The planet is experiencing changes in climate. The earth has gone through warming and cooling phases as part of its evolution, long before humans were around. Naturally occurring forces that can contribute to this climate change include the sun's intensity, volcanic eruptions, and changes in naturally occurring greenhouse gas concentrations. Since the second industrial revolution where industrialization and mass production started, humans have definitely added their footprint to environmental changes world wide, not to mention our manipulation of the Earth itself through nuclear power, mining, and other exploitation of natural resources including the disturbance of animal and fish habitats.

Canada is increasingly beset by natural disasters.  Uncontrollable forest fires burned through unsuspecting neighbourhoods in different corners of the country. Additionally, when fires eventually came under control, flash flooding from torrential rain storms overflowed municipal communities. Sewage systems were overflooded as water damage to properties forced expensive damages upon property owners.

Due to the rapid spike in climate-fueled property damages, home and property insurance rates have spiked across Canada. According to the Insurance Bureau of Canada, claims for personal property insurance exceeded $7 billion annually in the past five years.

Reinsurance companies that finance property insurance claims have redesignated Canada as a much higher risk for climate disasters. As a result, reinsurance premiums charged by these companies have increased between 25% and 100% in the past year.

As an investor, all these climate-driven effects on property insurance costs mean it will be more expensive to manage and maintain properties in high-risk zones of the country. Map out your investment strategy for 2024 by avoiding communities with high risk for climate disasters. Use national floodplain maps to do your research and steer clear of investments in those areas.

2. Adopt a regional investment strategy in more affordable provinces

One of the best pieces of investment advice championed by WealthGenius is the concept of not investing in your own backyard. Limiting your investment opportunities to your own community robs you of riches to be made in properties across different parts of the country.

Let’s use the example of an Ontario-based investor who wants to expand his or her investment portfolio. Real estate speculation in Ontario, particularly the Greater Toronto Area, is amongst the most expensive in the entire country.

Against the backdrop of higher interest rates — as well as climate change effects on property insurance premiums — Ontario investors may find fewer investment opportunities in their own province. Instead, it makes more fiscal sense to invest in out-of-province properties.

The east coast, particularly Nova Scotia and New Brunswick, have been relatively safe havens for Ontario investors to grow their portfolios. Indeed, the two Maritime provinces have the highest volume of out-of-province investors in the country, and for good reason:

Real estate is more affordable than in provinces like Ontario or British Columbia

• Less financing is required to purchase those more affordable properties
• Tens of thousands of people moved to the Maritimes during the COVID-19 pandemic 

The bottom line is that a targeted, regional approach to grow your real estate portfolio is the best way to make the biggest bang for your buck. Open your mind to investment opportunities at a national level so you can earn the greatest possible returns.

3. Invest in perceived high-value communities

What qualifies a neighbourhood as being of high value? It’s a very subjective idea because value is defined in different ways by different people.

However, there are some universal metrics to quantify high-value communities. If your investment strategy is based on multifamily property investments — which we highly recommend — then make sure the neighbourhoods you select meet certain criteria.

The biggest indicators of high-value neighbourhoods are amenities and access to public transit. Many people who live in multifamily buildings rent their properties and often do so without access to their own vehicles.

Therefore, they prefer communities within walking distance of amenities like grocery stores, dry cleaners, restaurants, parks, and more. Additionally, a public transit line that stops just outside the building, or at the end of the street corner is very attractive to would-be renters.

If you own a property in close proximity to these pedestrian-friendly amenities, you have the leverage to maximize your monthly income from tenants. Be very selective in the buildings you choose to invest in so you can earn the most revenue possible.

Join the fastest-growing real estate investment community for more helpful hints

Everyone has their own strategy, and one person’s definition of success is very different from another. Regardless of your investment goals, there are certain ubiquitous real estate investment principles that lay the foundation for success.

To learn more about these secrets to success, join the fastest-growing real estate investment community today. You’ll gain a mentor from one of the most successful investors in Canada, and you can share stories and experiences with fellow investors on similar journeys as your own.