How rising interest rates are bringing big opportunity for real estate investors in Midland | Canada News Media
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How rising interest rates are bringing big opportunity for real estate investors in Midland

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2 years ago

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During the pandemic, the real estate industry found itself in a unique situation.

Financial uncertainty and job loss prompted many property owners to sell, while the remote work model brought others the opportunity to relocate away from the city to smaller urban centres and more remote areas. Increased demand and lower borrowing rates caused listing prices to soar and stories of properties selling for hundreds of thousands over asking became the norm.

Fast-forward to the present day market. Interest rates continue to climb and the market has cooled. Property values are falling and many potential buyers are wondering if it’s better to wait it out.

Here’s why a cooler market can be a hot time to invest

Buying while the market is still softening has definite advantages.

Motivated sellers: Dipping prices and steadily increasing borrowing rates have some property owners feeling the pinch and as the trend continues, they are more likely to sell before the situation bottoms out.

On the other hand, once the downturn does begin to improve, those same sellers will be motivated to hang on to those assets or hold out for a higher price.

Less competition: Wise investors recognize those times when they have the upper hand in the scenario, and that time is now.

Potential buyers looking for Midland real estate are hesitant to move forward in an unstable market, meaning those stories of bidding wars and umpteen-thousands-over-asking are further and fewer between.

Investment value: Properties purchased during a softer market can often be obtained at a lower cost than what was paid even a year ago. As the economy becomes stronger and those properties regain their market value, today’s investors will be left with solid value in long-term assets.

Finding the right financing to secure soft-market investment opportunities

Canada’s inflation rate should begin to slow in early 2023 with costs of energy and other essentials gradually decreasing, and the Bank of Canada is expected to begin reducing borrowing rates towards the end of 2023. Until then, potential buyers looking for additional investment funding are left wondering about their borrowing options.

While investing in property during an inflated economy can seem like a risky move, this market can actually leave buyers in a unique position that brings big returns.

Although your interest rate may be higher in the short term, once interest rates come down, those buyers could see their properties increasing in value hundreds of thousands over a couple years.

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Unlock Reliable U.S. Real Estate Opportunities with Oak Street Partners

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1 day ago

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November 20, 2024

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OAK STREET PARTNERS UNLOCKING OPPORTUNITIES  FOR CANADIAN INVESTORS IN THE U.S. RENTAL HOUSING MARKET

Oak Street Partners is leading the way in cash-flow-focused U.S. affordable housing investments

TORONTO, ON | NOVEMBER 18, 2024 – With the Canadian real estate market facing challenges and declining opportunities for investors, Oak Street Partners, a Toronto-based private real estate investment firm, is offering a new avenue for Canadian investors to diversify into the U.S. rental housing market. Oak Street Partners enables investors to passively invest in U.S. affordable housing, providing them with stable, cash-flow-focused returns while helping meet the growing demand for quality, affordable housing in the United States.

“Market conditions in Canada have made it more difficult for investors to find reliable, income-generating opportunities,” says Parker Christie, Founder & CEO of Oak Street Partners. “By turning to the U.S. affordable housing market, we’ve been able to create consistent, cash-flowing investments that benefit both our investors and local communities.”

Building on this approach, Oak Street Partners facilitates investment by strategically acquiring and managing properties in the U.S., particularly in the Midwest and Southeast regions. Investors provide capital, while Oak Street handles all aspects of property ownership and management. Similar to a Real Estate Investment Trust (REIT), but privately structured, Oak Street ensures investors receive stable, cash-flow-driven returns without the need for direct involvement.
A key part of Oak Street’s approach is leveraging the Section 8 Housing Choice Voucher Program, America’s largest federal rental subsidy program that pays private landlords rent on behalf of low-income tenants. This guarantees a reliable, high cash flow income stream, even when real estate markets are challenged with high interest rate environments. By leveraging this program, Oak Street is not only able to provide consistent returns to its investors, but it also enhances lower-income communities, creating sustainable, quality homes for residents.

“It’s a win-win situation,” explains Trumbull Fisher, Director of Oak Street Partners. “Tenants are able to secure and enjoy quality, affordable housing, while investors benefit from reliable, government-backed rental payments that ensure steady cash flow.”

By investing in these properties, Oak Street is able to support the demand for affordable housing, while also contributing to the broader social good by addressing housing shortages and improving community infrastructure. This dual focus on financial return and social impact is what makes Oak Street’s approach stand out in today’s real estate investment landscape.

In its first year of operation, Oak Street has acquired over 100 units in Ohio. With $10 million in assets under management, the company has been able to offer its investors a 10 per cent cash dividend, which was distributed nine months into its operation. This is a rare milestone for companies in their first year, as many real estate investment firms operate at a loss in their early stages.

“As we look to the future, our goal is to expand Oak Street’s portfolio in high-demand areas across the Midwest and Southeast,” adds Christie. “Our focus will remain on sourcing properties that deliver strong, stable returns while positively impacting local communities.”

For more information on Oak Street Partners visit oakstreetgp.com/.

ABOUT OAK STREET PARTNERS

Oak Street Partners is a real estate investment firm focused on creating diversified and stable opportunities for investors in the U.S. rental housing market. We offer a unique pathway for investors to build and expand their portfolios by investing in affordable housing opportunities, improving the quality of life for tenants while delivering consistent returns for investors.

Website: https://oakstreetgp.com/

LinkedIn: https://www.linkedin.com/company/oak-street-partners-gp

Instagram: https://www.instagram.com/oakstreetgp/

Email: info@oakstreetgp.com  n

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‘The Bidding War’ taps into Toronto’s real estate anxiety

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November 12, 2024

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‘The Bidding War’ is a play skewering Toronto’s real estate market via a story about a one-day bidding war over the city’s last affordable home. The cast and crew say it exposes how the housing crisis brings out “the worst in people.” (Nov. 12, 2024)

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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2 weeks ago

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November 6, 2024

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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