Home ownership is likely the first thing that comes to mind when thinking about investing in real estate but buying a house in today’s market can feel incredibly challenging, if not impossible.
Indeed, six in 10 Canadians feel homeownership is completely out of reach, according to a poll by Ipsos SA earlier this year. Yet, including real estate in your investment portfolio can be a smart move for a few key reasons.
First, it’s a great way to protect your money from the eroding effects of inflation. Over time, property values tend to rise with the cost of living, helping you keep the real value of your investment intact. Second, real estate can add a healthy dose of diversification to your portfolio, smoothing out the ups and downs of stock and bond movements.
Traditional home ownership may not be the right choice for everyone, but there are investment alternatives such as real estate investment trusts (REITs) and private real estate investment funds that offer exposure to the real estate market. Like any investment, however, thorough due diligence is crucial to understand how real estate fits into your overall investment strategy.
Homes and rentals
Homeownership can indeed act as a safeguard against inflation, given the tendency of residential property prices to keep pace with rising costs. Leveraging your investment and capitalizing on favourable interest rates can also be a strategic path to building wealth, all while providing a reassuring sense of emotional security.
The dream of owning a home is a common aspiration, but it’s vital to tread carefully and avoid becoming “house poor” — the state of paying too much on housing expenses relative to one’s income. It is essential to balance these benefits with the potential downsides of homeownership, including a lack of diversification, reduced liquidity, steep transaction costs, tax implications and the ongoing burden of maintenance expenses. These costs often catch homeowners off guard, highlighting the need for careful planning.
Additionally, property-specific risks, such as environmental factors and interest rate changes, can impact the financial stability of homeowners. Without expert guidance to navigate these complexities, homeowners may find themselves ill-prepared for unforeseen challenges, like the recent case of the Seawatch subdivision in Sechelt, B.C., where homeowners were forced to evacuate due to the threat of sinkholes, making their homes inhabitable and worth a lot less.
For those already on the homeownership journey, expanding your real estate investments through rental properties is a compelling option. This allows you to maintain control over property management, tenant selection and provides a dependable source of income.
Nevertheless, it’s important to acknowledge the considerable responsibilities, initial capital demands and property-specific risks that come with this territory. Maintaining a prudent balance between investing in real estate and having adequate reserves for ongoing maintenance is crucial. This will help secure your financial well-being and achieve your investment goals.
REITs
In contrast to purchasing a property, real estate investment vehicles — such as REITS — are intangible assets that provide financial exposure to the real estate market, all while benefiting from professional management.
Unlike the traditional homeownership route, which demands a substantial down payment, investing in REITs can be done with just a few hundred dollars. They are often prized for their high liquidity, low initial financial commitments and transparency.
Though REIT prices often closely correlate with equities — rather than deliver entirely uncorrelated exposure such as some alternative assets — they allow investors to buy and sell at their convenience.
With the wide variety of REITs available, spanning from commercial to residential REITs across various sectors and locations, investors can achieve an adequate level of diversification compared to buying individual properties.
Investing in REITs also involves relinquishing direct control over property management. This shift of responsibility to professionals and the freedom from the hassles of maintenance can be a compelling factor for many.
For those yearning for real estate exposure, but lacking the capital required for property purchases or private fund investments, REITs offer an effective and accessible alternative.
Private funds
For those seeking more sophisticated solutions, private real estate investment funds offer diversified portfolio management that can potentially outperform other forms of real estate investment under certain conditions.
These funds are managed by professionals and may offer solid returns, but also risks that may not be right for everyone. For instance, the investment strategy — including leverage rules and property types — varies among different funds. Investors should always account for factors such as lock-up periods, which can extend for more than a decade, and the potential for redemption suspensions during market stress.
Adequate due diligence on real estate investment funds often involves advisers conducting six to 12 months of research, including face-to-face meetings with fund managers, site visits and fund provision analysis. With these complexities and restrictions, private funds are usually only suitable for those with a high net worth and long-term horizon.
Overall, there is no one-size-fits-all solution to investing in real estate. Everyone possesses unique goals, personal circumstances, time horizons and risk tolerance levels that influence how real estate aligns with their investment strategy.
Also, given the complexities associated with some real estate investments, the guidance of an adviser can prove invaluable in both simplifying the due diligence process and helping you achieve your financial objectives.
The key to successfully incorporating real estate into your portfolio lies in conducting thorough due diligence, with special attention to liquidity constraints, and assessing how this asset class complements your individual circumstances.
Neil Kumar is a portfolio manager, investment adviser and founding partner of JSK Partners.
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.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
