The Bank of Canada (BoC) has been raising interest rates for a year, leading to the possibility of a recession. Recent economic data suggests that the Canadian economy is on the brink of an economic downturn or will avert a recession. However, 54% of Canadians feel confident that their personal financial situation will remain stable in 2023, while 38% are not confident and 45% are worried that additional rate hikes by the central bank will impede their ability to purchase a home in the national real estate market.
The RE/MAX Housing Market Outlook 2023 report found that 73% of Canadians agree that home ownership is the best long-term investment they can make, up from 49% in 2021. Residential prices have maintained an upward trajectory for nearly two decades, and the typical home price in the Canadian real estate market has climbed approximately 200% since January 2005. As economic conditions improve and the housing market stabilizes in the second half of 2023, Elton Ash, the Executive Vice President of RE/MAX Canada, believes “a more regular pace of activity will resume” in the Canadian real estate sector. How can investors effectively invest in real estate to achieve even a modicum of these gains in their lifetime?
Canadians are confident in their wallets, which is a positive sign for the housing industry and the economy. To make money in real estate, there are three strategies to consider.
1) Owning a rental property can provide regular income and asset appreciation, as well as tax-deductible expenses that can add more to the investment.
2) REITs are corporations that use investors' capital to buy and operate income properties, paying out a monthly or quarterly income. They are similar to dividend-paying stocks.
3) Investing for the long term in a residential property is the most effective way to grow money, as it will appreciate in value over time. This is known as home equity, which is an investment for the long term.