All smoke, no fire – Despite appearances, Canadian housing markets fall further into slump, based on underlying economic fundamentals

Vancouver, BC, Nov. 14, 2020 (GLOBE NEWSWIRE) -- Contrary to a growing number of real estate market predictions, a new report by The Real Estate Investment Network suggests housing markets are falling deeper into slump despite increasing property prices.

According to The Real Estate Investment Network’s COVID-19 Special Edition: Real Estate Cycle Update report, all major real estate markets in British Columbia, Alberta, and Ontario have fallen further into the real estate slump phase driven mainly by the economic impacts of the COVID-19 pandemic.

These findings are based on many research methodologies including The Real Estate Investment Network’s Economic Turmoil Formula and Real Estate Cycle Scorecard. Both resources highlight rapidly evolving changes of the underpinning economic fundamentals affecting real estate markets, such as GDP, employment, and population. The report indicates the continued impact of COVID-19 on these driving indicators has moved most markets further into the slump phase.

The Real Estate Investment Network’s COVID-19 Special Edition: Real Estate Cycle Update produced real estate cycles for three provinces:

• British Columbia - Beginning of slump
• Alberta - Beginning to middle of slump
• Ontario - Beginning of slump

As well as five major cities:

• Vancouver – Beginning of slump
• Calgary – Beginning to middle of slump
• Edmonton – Beginning to middle of slump
• Toronto – Beginning of slump
• Ottawa – Beginning of slump

While others suggest hot markets in major Canadian cities, The Real Estate Investment Network research shows these may all turn out to be just hype.  

“At first glance, it might look like the data is pointing towards a market boom because in many key cities, real estate values have been, and continue to, increase. But this is all smoke and no fire. This is is a common misconception since characteristics of the boom and slump phases of the real estate cycle sometimes overlap and can be confusing to many if not most people,” explains Jennifer Hunt, Vice President Research, The Real Estate Investment Network. “When looking ahead, the signals indicate markets are further entrenched in the early phases of the slump, so homebuyers and investors are wise to proceed with caution.”

The real estate cycle functions as a predictive tool to determine which phase a specific market is currently in based on driving indicators and market influencers. The report shows where specific markets are at in the real estate cycle including which investment tactics are best suited for each phase.

“It’s common to have rising real estate prices in the early stages of the slump phase. Even while prices in many markets are still rising, prices are not the only indicator. Most other data are now pointing at a slump,” added Hunt.

The report includes a new and expanded tactics table (of what to do and what to avoid during various phases of the cycle) featuring a total of 11 tactics:

1. Buy and Hold
2. Rent to Own
3. Fix and Flip
4. Fix, Flip, Refinance
5. Agreement for Sale (Buy)
6. Agreement for Sale (Sell)
7. Option to Purchase (Entrance)
8. Assignment
9. Foreclosure (Availability)
10. Vendor Take Back (Buy)
11. Vendor Take Back (Sell)

According to Hunt, the new tactics table is meant to guide investors on how to respond to specific market conditions.

“Regardless of current market conditions, there are always good options available for real estate investors in every phase of the real estate cycle. What’s more important is to stay ahead of the curve, don’t get caught up by the hype, and quickly adapt to what the market gives you. It’s like making lemonade out of lemons. For example, when life gives you a market slump, towards the end is the optimal time to buy-and-hold, but now it’s early, so prepare for the end phase of the slump and ensure you invest wisely ” Hunt added.  

About The Real Estate Investment Network

The Real Estate Investment Network is the sum of numerous parts. Founded in 1992, it has since been the most trusted, unbiased real estate investing resource for education, research, and investment strategies.

For over 28 years, The Real Estate Investment Network has been at the forefront to change the conversation about real estate investing. A vigorous combination of meticulous research and analysis, brass tack economic fundamentals, strategic investing systems, exceptional market specialists, and solid industry leaders all contribute to world class, relevant education and development, accessible to all real estate investors.

The dynamic and noteworthy team at The Real Estate Investment Network is a collective of game changers, empowering leaders, and successful entrepreneurs. Together, they collaborate with purpose to advance the community experience for new investors and seasoned professionals alike.

Decades of hands-on experience and real estate investing analysis allows them to effectively create and support an environment for investors to thrive in their business of real estate investing and achieve their financial security and certainty. You can count on The Real Estate Investment Network Team to deliver relevant, authentic, and meaningful resources, always with commitment and intention for an exceptional Member experience.

 

For more information:  

You may access a copy of the report here

Jennifer Hunt
The Real Estate Investment Network
604-449-6034
media@reincanada.com