The past year has been very unpredictable for the real estate market. After the first wave of COVID-19, the real estate market plummeted to its worse. Resale of residential properties went down by more than 50% of its preceding quarter.
Still, 2020 was profitable with minor glitches. What the market lost in Q2 was recovered in Q3 and Q4 of 2020. And so, the real estate market remains the top attractive opportunities for investors in Canada.
Before investing in the country’s real estate, it is imperative to understand the trends for 2021. It would help you decide how you must invest in 2021 to gain huge profits.
How 2021 Would Treat Real Estate Sector?
It is widely known to the investors that inventory is low at the moment. In fact, it has been low ever since the pandemic.
On the other hand, the government is making efforts to stabilize the market by injecting funds in the market and starting new projects. It is further authenticated by Minister of Families, Children and Social Development and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), the Honorable Ahmed Hussen when he said:
“Our Government wants to ensure that every Canadian has a safe and affordable place to call home. Investments with our municipal partners like Edmonton under the Rapid Housing Initiative’s Major Cities Stream will go a long way to effectively supporting those who need it most by quickly providing new affordable housing units to vulnerable individuals and families to keep them safe. This is one of the ways our Government’s National Housing Strategy continues to provide housing for Canadians from coast to coast to coast.”
However, it is also getting a norm that buyers are more interested in moving out of big cities, living in a single-family house. It gives an idea that investing in big houses (detached, semi-detached, etc.) homes are in trend and a good investment opportunity.
According to some experts, the average housing value is expected to rise by 5%, only 2021. It means if you buy a bungalow for a million today, you could expect to get an offer of somewhere near $1,050,000. That gives a profit of $50,000 on your bungalow for sale in Oakville.
It is just to give you an idea and a push to start investing in Canada to get good returns.
Profit-making Investing Options for Canadian Investors
Invest in Condos
Condos have ever been a target for investors and first-time homebuyers. They are relatively inexpensive, suitable for singles persons (and even for small families), and would be a good income source when renting out.
After the spread of coronavirus, the condo market, especially in the big cities, is declining. However, there are several reasons why investing in condos is worth it:
Sooner or later, people would start returning to big cities. And based on past trends, the prices would go up, giving you a head start to invest now to save for later.
Interest rates are low – the government is making every effort to flourish the real estate market and offer affordable homes. It means, if you have a limited budget to allocate to buy a new house, you could invest in a condo, enjoy the time till the interest rates are low, and get an investment property to resale for a later time.
Immigrants would start coming back – besides Invitations To Apply (ITA), it is also expected that immigrants would skyrocket in the next three years. According to Immigration.ca, some 1.2 million immigrants are expected to land in Canada between 2021 and 2023.
Invest in Single-family Houses
The next best option is investing in single-family homes – detached and semi-detached houses.
Everyone dreams of buying a house. It allows us to increase our net worthwhile living independently. However, down payment has always been a major hurdle here. Where 5% is the minimum amount, you require to pay the down payment, below 20% would require mortgage loan insurance. This amount is a surety to protect the lender (not you).
Where detached and semi-detached homes are expensive, they are high in demand. After the pandemic, many Canadians prefer living in larger houses rather than condos. Retired professionals and prominent families could be your target audience.
You could buy these large houses to find suitable tenants for the short term. And after a few years (let us say a couple of years), could resale the house at a profit margin.
To give you an idea, the average price of a bungalow for sale in Oakville is $1,641,392. That is the price as estimated by CREA for 2020 and shows a surge of 27.2% compared with the prices back in 2019.
Invest in Spare Rooms
Renting out a spare room or space is one of the cheapest investments with an extra income source.
This option of renting a spare room may not sound appropriate today as of the pandemic. But it is still worth a shot.
All you need is a spare room, some possible renovations, and furnishing and decorating the room.
Where Should You Invest?
The options to invest in the real estate sector are way too many. You could invest in REITs, commercial properties, vacation homes, and more. All these options would give you benefits in the longer run.
The ones mentioned here are thoughtfully selected; condos are always in demand and are very affordable; detached/semi-detached houses are in demand after COVID-19 and have a returning margin of up to 27%; renting out a spare room is relatively inexpensive while making sure you get an extra source of income to reinvest.
To buy a property, you need at least 5% as a down payment (20% is recommended), a stable income source to pay the mortgage, and good credit history. And if you think buying is not an option, renting a spare room is always on the list of making an extra income.
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