WordPress database error: [Table 'wp_magenet_links' is read only]
DELETE FROM wp_magenet_links WHERE 1
WordPress database error: [Table 'wp_magenet_links' is read only]
INSERT INTO wp_magenet_links(page_url, link_html) VALUES ('http://rossmagazine.com/', '<a href=\"https://routetomillions.com/best-seo-audit-tools-for-your-website\" target=\"_blank\">SEO tools</a>')
WordPress database error: [Table 'wp_options' is read only]
UPDATE `wp_options` SET `option_value` = '1708741190' WHERE `option_name` = 'magenet_links_last_update'
A 2022 REIN FORECAST
By Danielle Rourke
It’s described as ‘the great Canadian (Real Estate) migration,’ a prediction that came to life in April of 2020, the beginning of our continually evolving and ever changing pandemic. Why and how does migration continue to rapidly sweep across Canada and impact real estate? My recent interview with REIN CEO Patrick Francey reveals this and more, including forecasts predicted for 2022 within the real estate landscapes of Canada.
Firstly, despite the crisis of the pandemic, Patrick believes opportunity still thrives. The continual seeming melt down of the world over these past 2 years, has in turn created a major shift in people’s overall view of the world.
People generally have a greater appreciation of life, and more importantly, lifestyle. People imposed upon with the many conditions of working from home, schooling changes for their children, the plethora of other mandates and so much more, has created a major shift. This sudden adaptation to new working environments and new working requirements has affected almost every one of us, bringing about many new needs for individuals and families.
The trends that have emerged from the pandemic will continue throughout 2022 and beyond based on the knowing that life will truly never be the same. For some, the newfound freedom from the daily commute is a true blessing, a new routine that will not be easily reintroduced or justified.
The trend of moving away from heavily populated urban centers, the switch to homeschooling needs of parents often based on disagreement of mask or even vaccine mandates, has effectively impacted households. Suddenly one parent is choosing to work less, or to completely stop working at all. All of this continues to impact family dynamics. A new cohort of work from home and home schooling parents continues to develop, and continues to dictate new real estate needs.
Overall, people are moving. The great Canadian Real Estate migration began with people moving in droves from Ontario to the Maritime East Coast provinces. A home that can be bought in the Maritime Provinces for $400,000-500,000 is barely a down payment in Toronto or the GTA. Vast numbers of people continue to move to Alberta from BC and Ontario.
Forecasts for the year ahead:
1. The interprovincial migration trend will continue for 2022, with people moving to even smaller, often lovingly called ‘ex burb’ communities, hamlets and towns. People will continue to move away from heavily populated urban centers. If only a possible 10-15% population crowd moves to these smaller centers this year, the impact on the real estate sector in these locations will be significant. With these increased populations will come increased tax revenues, establishment of existing and entrepreneurial businesses.
2. The great new shift in lifestyle needs, to work from home, to create more self sustainable options, to obtain more room for work spaces and children, will continue to impact housing inventory challenges. There is normal demand, but no supply.
Patrick explains that, “People want to blame housing problems on someone or something, but you can’t. You could blame housing shortages on embattled investors, too much immigration, or foreign buyers. It’s not one of those things but it’s all of those things and far more.” Inventory is low when sellers seemingly have nowhere to go.
3. The national forecast must consider the regional markets. Overall, there is a national 20%-30% increase in real estate. Patrick explains that there is no such thing as an average Canadian house price; rather it’s always regional. That’s the difference between Calgary and Edmonton, or Vancouver and Chilliwack, Peterborough and the GTA, or Barrie and Hamilton. It’s the regional markets that have to be considered. They are all different. Patrick states, “As much as all boats seem to rise on a high tide, when it comes to real estate, we have to look at what is happening economically for each city and province. I see prices moderating, but like interest rates, we’ve normalized a very low interest rate. So, even if interest rates double, they’re still very, very low. You can get a 5-year fixed mortgage for 1.5%, even if it goes to 3%, that is what was being paid in 2018, 2019. Just 2 years ago, 2, 3 and 4% interest rates were amazing and people were happy! The normalization of low interest will remain.”
4. Investment in real estate will continue to substantially spike. Investors and buyers alike need to pay attention, especially in the area of pre-built homes. Patrick reminds us that although it’s easy to sound like a genius when showing property value increases of 20-30% on paper, mistakes are being made. Investors make mistakes.
Deals get done that shouldn’t and investors don’t realize the impact today. Patrick notes that, “In the investment world, the mistake you make today sometimes doesn’t manifest until years later. For example, buying pre built condos and not understanding the nuances of what goes into a pre-built property can be detrimental. Buying a pre-built property that won’t be ready for 3 years, will not guarantee that the banking rules will remain the same 3 years down the road.” Buyers must think about whether they will still be able to qualify for the same mortgage. Buyers need to consider the possibilities of escalating costs, what they are, and whether these costs are absorbed by the builder or by the buyer. And often, it is the buyer. So, someone who bought a condo for 500,000 may realize it turned into a much larger cost down the road. That is the environment that we are in.
Pre-built homes are subject to challenges in delays that relate to supply chain breakdowns and labor shortage. Overall, project delays for buildings are being experienced. Patrick warns buyers to be cautious about getting caught up in the ‘froth’ of real estate, of getting rich quick and encourages the inexperienced to educate themselves.
5. Pay attention to specific property types. Patrick shares that, “It’s easy to paint the entire real estate market with one brush and that is that it’s going up, it’s going crazy. But, the more specific reality is, that this is truthfully mainly for single family detached homes.” In fact according to recent stats, the condo market in Calgary and Edmonton is currently anything but strong. Patrick says it could be described as an overbuilt sector and one to be cautious with. He advises that making a real estate investment in a condo in Calgary or Edmonton does not compare to the GTA or Vancouver, where the condo market is starting to come back. Why here and not there? Affordability. Now all of a sudden these property types, in specific regions, are more affordable.
6. Technology will continue to shrink the world. In terms of real estate, technology has changed everything. The trend of Realtors not meeting buyer clients in person at prospective homes will continue. Realtors will continue to show homes to their clients over the phone using FaceTime while they ‘tour’ the house together. It will continue be more uncommon for a realtor to meet a buyer at a house to view it, than common. The large amount of capital flowing out of Ontario and BC into Alberta by investor buyers, will not require them physically traveling to Alberta to view these properties. As Patrick puts it, “It will instead involve taking a tour via a highly equipped and updated I-Phone.”
Patrick discussed how rather quietly and continually, companies like Bell, Rogers, Telus, and provincial governments have sunk billions and billions of dollars into 5G. Controversy aside, 5G is ramping up and rolling out. Everywhere. For the most part, people think 5G is primarily about faster Internet service, speed and phone connection etc. It is all of these things, and it’s shrinking the world.
The rise in technology is a part of the de-inflation of other sectors. Travel, hotels, and hospitality industries are generally affected, since it’s no longer required to spend 3 days to fly from Vancouver to Toronto for the 3 hour in person meeting, that can now be conducted just as easily, and often more effectively, from the comfort of a home office. This technology helps include every team member, effectively eliminating the need for repeating information afterwards in many cases. In a recent survey, up to 37% of travellers confirmed they would no longer be traveling for business in the same way and in the same capacity. So as much as there is a threat to inflation rising, the flipside via technology is the de-inflationary effects like travel and so much more.
7. Finally, take care of yourself. As Patrick puts it, “You are the center of your universe. If you aren’t looking after yourself, you don’t have the mental, emotional, spiritual, physical capacity to look after your family, friends and ultimately clients and customers.” Parents in general often think it selfish to look after themselves, however as Patrick explains it’s the opposite. “Looking after yourself is in fact the most selfless thing you can do. Because if you break down, so does everything else. You owe it to your family to look after yourself.”
You may already be familiar with Patrick Francey. Perhaps you’ve tuned into one of his Mindset Matters shows on his The Everyday Millionaire podcast series. Born and bred in Edmonton and an entrepreneur since 1984, Patrick is an advisor, mentor and coach to countless real estate investors, entrepreneurs and other individuals. This real estate path ultimately began when he began to study the success of entrepreneurs he admired. As he got to know them, he quickly realized one common denominator. Despite how well each of them did in business, they all owned various forms of real estate. In 2000, Patrick became a member of the Real Estate Investment Network (REIN) and began investing in real estate, including single and multi-family properties and light industrial. He continues to build his established Canadian investment portfolio. Today, with over 35 years of business experience, Patrick is the CEO of REIN. In this position he’s held since 2012, he continues to serve as a respected and inspiring leader for the organization. Patrick knows real estate and I think we can agree that his forecasts here encourage our future.