Investing Strategies

There’s always a silver lining …

How times have changed since our last newsletter!  As the world is dealing with the fallout of the COVID-19 outbreak, it is still possible to find a silver lining through these devastating times. Although I have been away for a while, my passion for real estate has never changed and I would love to share with you a positive perspective that may lighten up your day during these quarantine days. 

Some questions you may be wondering … where is real estate going now?  Is the market going to crash? Are we heading back to normalcy within the next 6 months or year? I have seen the many ups and downs of real estate market in GTA and many Ontario markets in the past 20 years.  Not one person will have a crystal ball and know or predict how things will turn out.  However, having said that, we do have the ability to analyze what we do know now and create strategies to help us take advantage of our current market conditions.

Here is one man’s opinion on what’s possibly going to happen in the next 6 months to a year.  First of all, I think it is still too early to assess the damages of COVID-19 on the economy.  It’s too soon to tell how bad it will become. When the government relief packages run out in June, it’ll be a while before businesses can fully reopen and return to their full capacity again.  Employment in the next 6 month to a year will be hit pretty hard too as consumers’ confidence will be low with severe impact on the employers’ businesses by COVID-19.  The economy will depend on both the consumers as well as the local businesses so it will take much time for both sectors to revive to the level of normalcy again. In terms of real estate, I see RE sales activities to continue to stay low for the time-being.  However, I don’t see a major price correction because the inventory on the current market is still low compared to the pending demand before the COVID-19 crisis. GTA is still the largest market in Canada and a major destination for new immigrants.  So, it would be safe to say, there will always be a demand in GTA. As more and more people are working from home, the commercial retail and office spaces will continue to take a hard hit.  As people are now focused on online meetings and shops, the need for physical space will reduce. The good news is, the multi-residential or single residential properties will do just fine as they ride out the uncertainties during these times. 

On the mortgage financing side, will the federal government want to loosen up the current mortgage rules and let housing and construction be a leader in the recovery process after this COVID-19 crisis?  There is a possibility.  The prime rate is already at record low thanks to the emergency rate cuts from Bank of Canada since mid-March.  Because of this move, variable-rate mortgages will be a good choice for the next 1-2 years and purchasers should take advantage of this.  We, at CE Properties, see this as a silver lining and perhaps you too should take advantage of the following 6 months to a year mortgage rates during this market volatility.

Just like what Warren Buffet says, “Be fearful when others are greedy.  Be greedy when others are fearful”.  In other words, buy when others are selling and sell when others are buying!  Do not let fear consume you, but do be diligent and do your homework before you make your purchase! Free to contact us if you are interested in our investment opportunities.