Never be fooled into a complacent approach to real estate. In Canada we have been blessed with amazing performance of our real estate market over the last 2 decades. Will it last, will it plateau or will if begin to fall off. All will be driven by the underlying real estate cycle. Learning how to read this important cycle is now more important than ever.
In this piece, part 3 of the “Canadian Real Estate Cycle” series, I delve into more detail on how you can become the best market forecaster you know.
With the constant changes in the real estate market, you have to stay on top of all the information that is being distributed across the country. My book, ‘Secrets of the Canadian Real Estate Cycle’ is designed to turn myth into fact and help you understand exactly what is going on around you. A calm perspective is your best ‘chance of survival’ amidst media noise and market changes, so take the chance and be enlightened.
I’m happy to present part three of the series unveiling chapter two of my latest book ‘Secrets of the Canadian Real Estate Cycle.’ You have to consider all the facts in real estate, so now is your chance to get a head start on the masses.
Real Estate Cycle Exceptions
As noted in Part 1 and Part 2 of this series, there are a few exceptions to the rules of the real estate cycle. First, some properties within a city or region may continue to command a premium irrespective of what is happening in the real estate cycle of a nation. These properties are likely to have some sort of serious “X factor.” For instance they have historical signiﬁcance or a combination of uniquely superior attributes.
Speaking in terms of real estate investment fundamentals, these are likely to be the best properties situated in the best locations on the best streets in the best neighbourhoods of a city. Whatever the reason, these properties (and the investment deals that involve them) are largely immune to the phases of the real estate cycle.
Another exception involves the emergence of specific localized hot spots. Regardless of the real estate cycle phase a nation, region or city may find itself in, these hot spots can defy the real estate cycle’s impact on prices in the region in which they are situated.
Cycle Immune Hot Spots
These hot spots emerge for a number of reasons, including the rezoning of land to allow more population-intensive developments to be constructed (therefore effectively increasing land values), or proximity to signiﬁcant new projects planned for an area. Such new projects can include new infrastructure resulting in the creation of numerous employment opportunities, major transportation improvements like light rail rapid transit development, or a signiﬁcant increase in the level of public amenities available. But strategic investors should be forewarned: these hot spots will eventually be subject to the real estate cycle because they will reach a level relative to surrounding or similar locations.
For instance: This report uncovers how infrastructure DIRECTLY changes a real estate cycle: The New Rule
Exceptions to the cycle can also emerge as a result of culture shifts driven by lifestyle demands. The impact on real estate values can be positive, negative or both. One example of a culture shift is when baby boomers seek new lifestyle opportunities or abandon previous lifestyles. This could increase real estate values in favoured new lifestyle locations and reduce real estate values in former hot-spot locations. Again, such exceptions to the real estate cycle will eventually complete their adjustment to the culture shift and will then follow the real estate cycle once again.
An often missed shift in this cultural shift is the coming impact of Generation Y and Millenials. Read this report for more insights on real estate markets from 2016 and beyond. REPORT: Don’t get caught BEHIND this shift
Statistics and the Real Estate Cycle
Real estate investment is a numbers game, and no discussion of the real estate cycle could be complete without a review of how real estate–related statistics are reported and how we need to view them in order to better understand which phase the cycle is in.
As strategic real estate investors, we want reality, not fiction. That is problematic because most real estate statistics are presented in way that serves a predetermined purpose or that lacks context. And make no mistake: the strategic investor needs to take a hard look at the numbers. We want to make sure we understand what they tell us. We must now, to ensure we are filtering the noise to uncover actual facts that are driving the real estate market up or down.
Never before have so many people had so much to say about EVERYTHING and it is easy to be drawn into the drama, rather than strategically sitting back, watching and then jumping into appropriate action. Those who seem to yell the most, and get the most attention, are focused on the “Market Influencers” rather than the “Market Drivers”. This is stated, by me, simply as a fact, not a judgement. A sad fact, yes… but just a fact.
Your job as a strategic investor is to discover how NOT to be pushed off your plan, unless the Cycle Fundamentals really are shifting. Here are a couple of reports/essays that will help
REPORT: How To Filter All of the Noise To Uncover The Signals that Matter
REPORT: How the Advent of CNN Has Lead Us To BAD Investment Decisions
These above reports are good reads that will help set up the next part of this “Real Estate Cycle” series.
Part 4 coming soon – watch this space!
If you missed the first 2 parts, here are the links:
Part 1 and Part 2
Secrets of the Canadian Real Estate Cycle will give you insight into the economic fundamentals that you may not have realized before. Make sure to look out for the next post in this series, coming out next week. Good luck and happy investing!