New year, new market! Will 2018 be as hot of a year for Canadian real estate as 2017 was?
For our 100th Episode, we invited Clayton Jarvis from Canadian Real Estate Wealth magazine to come share his predictions for this year’s top investment markets across the country.
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About Clayton and Canadian Real Estate Wealth (CREW) Magazine:
Clayton has been working for CREW magazine since April 2016. He was originally a teacher, lived overseas, and moved to Toronto to write. This is when real estate found him. He’s seen a lot in Toronto’s market—it was going crazy when he arrived. The golden horseshoe out near Hamilton took off, too. CREW has been publishing for 8 or 9 years. It is a nationwide magazine but covers Ontario and BC the most, as the GTA and Greater Vancouver markets are the biggest. Manitoba is covered a lot too, as is the East Coast.
On what 2018 holds for Canadian real estate, generally:
Many transactions and an influx of people coming into major markets (particularly Toronto and BC). Affluent, educated new arrivals want to own property. Investing will be really great for those who own rental properties—demand will keep going up. The new mortgage stress tests will keep many people on the sidelines, still renting for longer periods. If rentals are in high-demand areas, people will do fine. No major appreciation stories as in the past few years, except maybe on Vancouver Island. Supply is tight there and demand is strong. People have learned their lessons and been burned. They know speculation is not sustainable and not something to build a market or portfolio on.
On top-performing cities outside Vancouver Island:
Kamloops is very affordable and stable. Calgary could have another recovery year with their low base increasing. Saskatchewan is sleepy—there is a lot of supply in bigger cities and not much happening with oil or other commodity prices. Winnipeg and surrounding rural areas are very affordable with huge population spikes (Manitoba is good at attracting and helping to establish immigrants). Peterborough, ON is very affordable (property goes for a fraction of Toronto prices, but rents are only $100-200 less per month). Hamilton to Niagara Falls has popped over the past two years. They’re getting a GO Train (rail transit), so this area will be nuts. Montreal had a great 2017 and its economy shows no sign of slowing down. It’s a huge tech centre (Amazon may likely be headquartered here) and is quite undervalued. Employment and demographics are a problem out east, but it’s affordable. There is a lot of money to be made in Nova Scotia.
On how he keeps up-to-date with the entire country:
Local insight. The people who have the best insight and up-to-date information are realtors, especially those that deal with investors. Also, investors themselves—they talk to each other and at meetings. People who have on-the-ground insight. The magazine’s stats department is small, so they need to go beyond the numbers.
On his favorite 2017 real estate story:
Seeing the downturn in the Toronto market. This sent a panic not just in Ontario, but throughout the rest of the country. People have been talking about the bubble for years, and this gave perspective on why real estate bubbles form. It made people wake up to see how they shouldn’t be investing. You should be focusing on the numbers and making the most boring, sound decision. As someone who wants to buy and someone with friends who want to buy, this was a relief. You can’t build something on emotion—that’s not economics, that’s gambling.
On where he would buy with $1 million:
He’d get a multi-family property in a smaller, more affordable market. Manitoba is great. If you go far enough east or are willing to renovate, you can still get a six or eight-plex for $1 million. Economies of scale are hard to compare to anything else if you have six or eight tenants.
On what 2018 holds for Vancouver and his overall impressions:
People call Vancouver over-valued, but it isn’t so if people will pay it. An area like Surrey is exciting, with new developments, schools, and business headquarters. The area seems to have an upside, same with Vancouver Island. It’s no different than Toronto—if people want to live there, they’ll make it work. It all comes down to demand. Prices are likely not coming down.
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