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How to get in on the real estate boom without actually buying a house – CNN

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For many people, buying a home just wasn’t in the cards this year. There were too few homes for sale that were too expensive to buy.

Indeed, home prices have been on a tear, with third quarter home prices up more than 18% from a year earlier, according to the Federal Housing Financing Agency. And some analysts expect they will continue to rise significantly through 2022.
But those who got shut out of buying a home don’t have to miss out on rapidly appreciating real estate values.
Investing in real estate has long been the realm of “accredited investors,” a category of typically high-net worth investors with access to high-risk (and potentially high-reward) investments like private equity real estate funds, hard money loans or real estate syndication in which a group of select investors pool their money to buy properties. But through investment products like mutual funds and ETFs tied to real estate and online crowdfunding platforms, more people are able to access real estate investments.
“There are a lot of people who are feeling excluded from the home market right now,” said Ben Miller, co-founder and CEO of Fundrise, an online real estate investment platform. “Investing in real estate is a way for them to start to understand real estate.”
While other alternative investments like cryptocurrency can fluctuate wildly from day-to-day, real estate can be a reliable long-term growth investment and income generator, he added.
Here are some of the ways you can invest in real estate without buying a home or becoming a landlord.

Investing in REITs

Real estate investment trusts own and invest in properties. By putting money into a REIT, investors are given the opportunity to buy shares in commercial real estate portfolios and earn money from income-producing properties without actually buying or managing the property.
Pulblicly traded REITs are available to investors directly or through mutual funds and ETFs. Some popular ones are Vanguard Real Estate ETF (VNQ (VNQ)) or iShares U.S. Real Estate ETF (IYR (IYR)).
Given the massive increase in home prices, REITs had a banner year in 2021, with investor earnings hitting a record high. The cash flow from the investments for equity REITs were up 40% in the third quarter from a year ago to a record high $17.4 billion, according to an index from Nareit, a REIT industry group.
And there’s still room to run in the real estate market, said Jim Sullivan, BTIG’s REIT analyst.
“We continue to see positive signs for the economic recovery headed into 2022,” he said.

Crowdfunding

It used to be that investors needed tens of thousands of dollars to invest in real estate, but minimums have decreased dramatically. Crowdfunding companies, which pool smaller amounts of money from a large group of investors to put toward properties, have been able to get initial investment minimums down to hundreds of dollars. There are even options to invest with just tens of dollars.
Fundrise, for example, offers an option that requires a minimum investment of $10. At that level, the investment is entirely in a Flagship Fund, which contains real estate properties around the country ranging from single family rentals to logistics centers. The company charges an annual advisory fee of 0.15%, with its funds charging an additional annual asset management fee of 0.85%.
“Once you invest you can see that you invested in a real asset,” said Miller. “There is a real value, not just market value or cryptocurrency speculation. A lot of people never thought they could own real estate.”
Another way to invest through crowdfunding is in real estate debt.
For a minimum investment of $5,000, RealtyMogul offers funds focused on growth or on generating income from commercial real estate debt, as well as equity in apartment rentals and other residential properties. Fees include an annualized service fee of .5% and an annualized asset management fee of 1% based on the REIT’s total equity value.
Another company, Yieldstreet, offers an alternative investment fund, the Prism Fund, with access to investments previously only available to institutional investors. The fund is comprised of real estate debt and equity, as well as debt from the art, maritime and legal industries, among others. The goal is to generate returns that can be paid out quarterly as cash or reinvested. The minimum investment is $500 and the fund charges an annual fee of 0.5% and a management fee of 1%.
Crowdfunding sites offer up a way to get decent returns from the real estate market, though probably not as much as buying property directly, said Blaine Thiederman, certified financial planner and founder of Progress Wealth Management.
“Is it going to provide you the same returns that you might be able to receive if you were to go out and invest in your own real estate? Unlikely, ” said Thiederman. “However, I’ve seen stock-market-like returns through each of these platforms and occasionally better returns.”
While their simplicity and favorable income streams from crowdfunding sites are attractive, he said, investors need to be aware of fees and the period of time you have to wait to get your initial investment back.

Should you invest?

Since real estate tends to both increase in value and generate income, it’s a good way to diversify your portfolio, said Marcus Blanchard, a certified financial planner and founder of Focal Point Financial Planning.
“Stocks typically have most of their return from the price appreciation and bonds typically provide most of their return through the interest payments investors receive,” he said. “But real estate is right in the middle, where returns come more evenly between price appreciation and steady income.”
But there are some risks, including the volatility of the real estate market and the quality of the property, said Blanchard. The larger REITs typically have access to higher quality investments because of their scale. Meanwhile, smaller crowdfunding firms do their due diligence but still might be investing in lower quality properties, he said.
Most advisers recommend putting only a small portion of your overall investments in real estate.
“I typically don’t recommend anyone invest more than 10% of their portfolio in real estate whether it be through a REIT, an investment through an online platform like Fundrise, or in rental properties because there’s just so much risk,” said Thiederman. “Investment strategies need to be profitable, because who knows what will happen throughout the rest of our lives, but that doesn’t mean we should be investing in speculative apartment complex developments with 50% of our retirement accounts.”

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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B.C. voters face atmospheric river with heavy rain, high winds on election day

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VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.

Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.

The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.

Wednesday was the last day for advance voting, which started on Oct. 10.

More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.

Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.

An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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No shortage when it comes to B.C. housing policies, as Eby, Rustad offer clear choice

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British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.

David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.

But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.

“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.

Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.

But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.

Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.

Yet a host of other factors are at play, rates in particular, Yan said.

“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.

Rustad, meanwhile, is running on a “deregulation” platform.

He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.

Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.

Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.

If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.

“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.

Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.

“Who do you believe will deliver a better tomorrow?”

Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.

The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”

IS HOUSING THE ‘GOVERNMENT’S JOB’?

Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.

“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.

Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.

“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”

The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.

The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.

Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.

They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.

Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.

Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.

Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.

“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.

The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.

The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.

At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”

A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.

Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.

“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.

Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.

“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.

Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.

Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.

The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.

A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.

Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”

The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.

Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”

Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.

Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.

“It diminishes us as a society, but then also as an economy.”

This report by The Canadian Press was first published Oct. 17, 2024.

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