A booming real estate market across Canada — including in Windsor-Essex in Ontario — has meant that for some investors, opportunities are drying up, and they’re turning their efforts toward the United States.
As recently as five years ago, Windsor’s properties were a steal. But with the average price of a home selling at a record $636,422 in the region in January — a 10 per cent jump from the month prior, and about 26 per cent more from the same time last year — investors say, thanks to bidding wars and dwindling profit margins, there are fewer opportunities to invest locally.
“When the prices are too high, they’re going to be looking at the outskirts,” explained Danial Malik, a broker at ReMax Preferred in Windsor
The outskirts are not just communities in the county, but out of province, as well as south of the border.
“These buyers are going to the states to look for more opportunities since they know that the prices are a little bit easier to access,” he said.
Investors look south
Local entrepreneur Dan Crosby was among investors who started looking for a different means of investment.
“I started looking outside of our own backyard here, and American real estate really caught my eye,” he said.
WATCH | Local investors at Coachwood Capital explain why they turned to the U.S.:
Investors look elsewhere
7 hours ago
Duration 1:24
Investors at Coachwood Capital explain why some are looking to the other side of the border for real estate opportunities. 1:24
He even turned it into a business model.
Crosby said his firm, Coachwood Capital, which launched a couple of years ago, has simplified the process to invest in larger-scale investment properties like condo buildings on the other side of the border.
In the last two years, with a team of at least 30 investors, most of whom are from southwestern Ontario, the firm invested in a building in North Miami as well as a building in Canton, Mich. Both are senior-focused rental properties.
Between a booming market and certain tax benefits in the United States, Crosby explained the cash returns are sometimes triple or quadruple that of a southwestern Ontario investment.
Opportunity for a young investor
For 22-year-old Humza Mirza, buying a home in Windsor-Essex at his age, fresh out of school, seemed out of reach. But through his job with Coachwood Capital, he’s now part-owner of the Miami building.
The housing market in Windsor-Essex hit a record high in January. (Katerina Georgieva/CBC)
Mirza said it would have a difficult accomplishment to achieve on his own locally, given the competitive Windsor real estate market.
“Not many people my age can really front the amount of capital [needed to buy a home]. And essentially, you’re just kind of kicking the can down the road,” he said.
This option also attracted Windsor real estate agent Scott Innocente to invest with the firm and join as its market analyst.
“It’s definitely getting more difficult to buy properties [in Windsor-Essex] that are producing the returns that we’re used to,” he said.
Fewer investors could mean a calming market
Maggie Chen, broker of record for LC Platinum, said the window of investing for profit is slowly closing locally.
She predicts that though prices are still on an incline, this is the year when the market will finally settle down.
WATCH | Broker of Record Maggie Chen says a shift will come, but it’ll take time:
Maggie Chen
7 hours ago
Duration 0:31
Maggie Chen explains that, while investors are still very much continuing to buy in Windsor-Essex, she predicts a shift is coming, and with that, the possibility of relief in the market down the road. 0:31
A big reason for that is because investors are starting to realize they won’t be able to maintain cash flow as prices continue to rise.
“If you cannot rent it out for $2,500 per month, you are not able to keep the property without paying out of your pocket every month. Imagine then, what’s the point of investing if you have to pay out of your pocket unless you have the confidence that this market will keep growing?” Chen said.
She noted several of her clients are also looking elsewhere to invest, with Calgary being “the hottest topic” because of its housing prices.
While investors are still continuing to buy in Windsor-Essex, she predicts a shift is coming, and with that, the possibility of relief in the market down the road.
“Yes, I think if the investors stopped coming into our community, it’ll take some time for this market to relax a bit,” Chen said.
“So it’ll be more space for us, for all of us to breathe.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
