Real Estate Trends That Will Impact Investments In 2024

Fall has officially arrived in Canada. The leaves are changing colours and brisk northerly winds are creating cooler conditions across the country. The autumn wave also means Q4 is officially upon Canadian business owners and investors, which means preparing plans for a new year ahead in 2024.

For real estate investors, now is the perfect time to start making plans for the new year. Whether you’re beginning your journey as a real estate investor, or you’re a seasoned investor eager to expand your portfolio, it’s important to remain abreast of emerging trends that will impact the national housing market.

Here’s a quick overview of some of the biggest emerging real estate trends that will impact investment decisions in 2024.

Shifting sentiments about Canadian real estate

It’s been a volatile 2023 for housing across Canada. Rapid interest rate increases have dramatically slashed home sales in some of the country’s largest housing markets. Coupled with inflationary pressures not experienced since the 1980s, Canadians are feeling the squeeze as they struggle to sustain reasonable housing for their families.

Another matter contributing to relative housing unaffordability is a lack of supply. The CMHC forecasts that an additional 3.5 million housing units will need to be built by 2030 — on top of what’s already being built across the country.

Additionally, the CMHC projects that 60% of those 3.5 million units must be built in Ontario and British Columbia — home to the country’s two largest and most expensive housing markets, Toronto and Vancouver, respectively. Simply put, supply has not kept pace with growing demand in the bigger cities, which has priced many Canadians out of the home ownership market.

What these insights mean for real estate investors

While the trends in 2023 have not been kind to prospective Canadian homeowners, the outlook for real estate investors in 2024 bears more positive forecasts. Here are a few examples of how your real estate investment business can prosper in the months and years ahead.

Restrictive capital access equates to lower competition on real estate deals

In response to the Bank of Canada’s militant approach to raising interest rates in a muted effort to curb inflation, banks and other financial institutions have tightened access to financial capital. Tighter borrowing requirements mean less capital is available to finance big transactions, including real estate property acquisitions.

This may seem like a hindrance to your investment plans, but look at it from another perspective. Stricter financing conditions mean fewer investors qualify for capital financing. Subsequently, this means less competition during discovery.

As a result, current property owners have less leverage when negotiating sale prices. This, in turn, means you may acquire that next property in your real estate empire at a lower price than you initially bargained. At the end of the day, these conditions can translate into more money kept within your personal pocket.

Prioritizing ESG real estate issues means securing better financing terms

In recent years, much of the world has demanded collective action in regards to environmental, social, and governance (ESG) values. It’s not just concerned citizens or passionate employees driving this collective need for change. Even financial institutions prioritize lending money to investors and businesses that use capital to support ESG initiatives.

Since lenders are already tightening access to financial capital, don’t give them an obvious reason to deny your application. When negotiating terms with financial institutions, outline your plans to make value-added investments in your newly acquired property.

1. Show lenders that you want to make conditions better for tenants
2. Describe plan to retrofit old appliances with more energy efficient alternatives
3. Create a timeline to replace old windows with newer environmentally friendly models

As access to financing becomes tougher and more expensive to secure, give institutions added incentive to approve your request for capital. Align your investment plans with responsible ESG values so that you can source new forms of capital and grow your empire across Canada.

Priced-out Canadians look to multifamily rentals for affordable housing

Housing experts, advocates, and insiders have all sent one unifying message to the federal and provincial governments all across Canada. That message is that the country is in dire need of more affordable rental housing so that more Canadians can have homes of their own.

Part of this collective call to action is due to the rising costs of home ownership. Record high inflation and soaring interest rates have priced many Canadians out of maintaining monthly mortgage payments. According to Stats Canada, between the decade from 2011 to 2021, the percentage of tenant households across Canada increased by 21.5%.

What does this mean for real estate investors? It means multifamily investment strategies are the best way to earn reliable streams of income from your real estate properties. The demand for rental housing continues to grow, and suppliers of attractive multifamily buildings have available residences for prospective tenants.

Multifamily real estate investing is also a matter of simple economics. Earning steady monthly rental income from dozens or hundreds of tenants is far more lucrative than collecting cheques from one to two tenants per month. Why limit yourself to such small returns when you can go much bigger with the right investment strategy.

Partner with investment communities to grow your empire

The aforementioned trends are just some examples of what to consider as you build your real estate business into 2024 and beyond. Use this knowledge to adopt the right mindset and develop a winning strategy that will lead to greater success in the future.

Additionally, one of the best investment tips is to recognize you don’t have to do it all alone. By joining a thriving real estate investment community, you gain access to experienced investors who can coach you on the best ways to advance your own personal fortune.

You can also network with like-minded investors who are undertaking your same journey. Share pearls of wisdom from each of your experiences because there could be a powerful lesson from those stories. In fact, one of the best skills as an investor is to recognize what you don’t know yet. Learning from others can open your mind and help you avoid costly mistakes you may encounter without those insights.

Don’t miss out. Join the fastest growing real estate investment community and transform your investment dreams into a playbook for success.