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November 13, 2018 - Blog Article
Real Estate Investing: Key Market Indicators To Watch

There are some crucial indicators that can help investors select the best asset types for their real estate portfolio. They can help gauge when it is a good time to buy, and the outlook for a particular property or sector. However, while some of these fundamental statistics may seem obvious on the surface, their impact has changed over time, and what can be negative for one asset type, maybe an accelerant for another.

 

What important key market indicators should Canadians be watching when it comes to investing in real estate?

 

 

Employment

Employment levels are considered a key real estate indicator investors use when choosing where to invest. Canada’s unemployment rate is considered strong and competitive. However, if investors also take into consideration the number of people that are self-employed and freelance workers, that could mean real employment is much higher. This is all good news for Canadian real estate investors.

 

Wages

Wage trends can be even more important than unemployment figures. Especially comparing wage growth to general inflation and housing costs. When wages lag this other data, that will drive more shoppers to the basics, like discount stores and lower-priced restaurants. This can benefit certain shopping plaza owners who have a tenant mix that includes discount stores.

 

Affordability of Housing

When there is a shortage of affordable housing, it negatively impacts many areas of the economy. When a correction happens, it can also impact jobs, local tax revenues and national GDP. The lack of affordable housing leads consumers to seek affordable shopping options, similar to wage declines.

 

Consumer Spending

Consumer spending is an especially important factor for retail property investors to watch. However, there is some retail that can weather market changes better than others. When the market is in correction, people generally will still need to buy food and medicine. Thus, have these types of tenants in a retail shopping center will keep a healthy traffic flow.

 

Interest Rates

Rates are heavy influencers of many of the above factors. They can boost or deter consumer spending, limit housing affordability, and ultimately influence the employment market and wages.

 

What Leading Businesses are Experimenting with

What’s next? Watch what the leaders are doing with their own money, not just what the media is using to fill in around advertisements today. Are they really abandoning brick and mortar, or are they expanding with offices like Google or new physical store concepts like Amazon?

 

Summary

Real estate investors have never had access to data like they do today. These key indicators can provide great insight into larger trends and directions of markets by asset type. It is, however, important to note the different impact on various property types, and how the outcome of this data is changing over time as well.

 

Connect with the experts at ReDev Properties today to get more insights into the market and where the best moves are for investing in Canada now.