What Does The End To Real Estate Bubbles Mean For Investors?
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Is Canada now the first country in history to have found a way to prevent real estate bubbles and bursts? If so, what does it mean for real estate investors?
It appeared almost inevitable that the Canadian real estate market was about to implode, at least in Toronto and Vancouver. However, new media headlines suggest the Toronto property market is still as hot as ever, and fears of a downturn seem to have subsided.
This comes just as Canadian Finance Minister Flaherty steps down. So is Flaherty simply resting his crown and laying back on his laurels as a great pioneer and revolutionary who has accomplished something never before achieved in world history? Or is it a matter of slipping out before the dam bursts? In either case, what are the best financial and investment moves for real estate investors now?
It is sounding as if Flaherty may have helped Canada dodge the crisis bullet, even if his moves were less than popular. Alberta may have had little to fear anyway, but a stronger British Columbia and Ontario will definitely help bolster real estate in Edmonton and Calgary.
If a solution for avoiding real estate bubbles and crashes has really been found, it would be a global and historical first. It would also be yet another shining gem in Canada's financial crown, and could really elevate the nation on the world map.
It would mean Canadian residential and commercial property values marching on and upwards, although be it at a very modest single digit pace. This provides great confidence, and ongoing wealth building. Those investing in income properties will continue to receive the added benefit of monthly cash flow.
Of course, there are many reasons that this miracle fix is unlikely to last, stick or successfully be replicated here or abroad predictably.
For starters, some may question the fix. New data could reveal a much different state of affairs in Toronto and Vancouver any day. It's normal for there to be a small lift after an initial €˜correction' before the real dive starts. This remains true in real estate and stocks. With so many factors involved, this is something very hard to replicate even under the best circumstances. Perhaps even more significant, many of the best gains are made by those that plays these cycles and ride the waves for major financial gain. This can bring a severe conflict of interest with those that often have the most influence over direction of markets.
So what happens if this doesn't stick?
If it doesn't last, Ontario and British Columbia may see a depression which pushes even more residents, workers, and money to Alberta.
It also means ongoing, revolving, yet thankfully predictable property cycles with periods of rapid growth followed by corrections. Providing Canadian real estate investors know their cycles, this isn't a problem. Knowing when to get in, where to get in, when to hold, and when to sell will be valuable tools.
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