Thankfully, success in real estate doesn\u2019t require an ability to predict the future. But having an idea where the market is heading is critical to making the right decisions.<\/p>\n
PropertyGuys.com recently released a list of six trends that the company feels will have a lasting, potentially transformative effect on Canada\u2019s real estate market in the coming years. Based on consultations with PropertyGuys\u2019 network of agents, developers and customers in both Canada and the US, the trends presented paint a picture of a rapidly changing real estate environment where fulfilling tenant desires will require more of investors than simply adhering to the status quo.<\/p>\n
PropertyGuys co-founder and lead analyst, Walter Melanson, says the trends identified suggest fundamental changes in the real estate market \u201cthat have us believing that this is more of what the future has to hold.\u201d<\/p>\n
Co-living<\/strong><\/p>\n Before its catastrophic public flameout, We Work changed how the owners of commercial properties could exploit the sharing economy to drive rents for properties that were otherwise either vacant or failing to achieve the rent appreciation they needed to remain profitable.<\/p>\n Melanson says residential landlords are now considering using rental properties in the same way.<\/p>\n Most young city dwellers expect to have roommates anyway. By providing this new generation of renters what they\u2019re looking for \u2013 furnished apartments, bigger shared spaces, free cleaning and wifi, and the company of likeminded people \u2013 landlords can charge premium per room rents. It\u2019s like running a student rental, minus the holes kicked in the wall.<\/p>\n \u201cThe whole idea is that it builds community, it gives landlords a boost on rents that were going the wrong way for them, and it gives the people who rent the upside of having a way better place than they could ever afford on their own,\u201d says Melanson.<\/p>\n Climate change impacting sales of new builds<\/strong><\/p>\n As changing environmental standards force developers to alter how they build their properties, the cost of doing so will only increase over the short-term.<\/p>\n \u201cWe see this as one of the things that puts a lot of pressure on new development and new construction,\u201d Melanson says. \u201cThe world\u2019s becoming way more complex as it relates to building \u2013 getting permits, getting through the red tape. It changes so quickly, and it just gets harder and more expensive.\u201d<\/p>\n Higher prices for new product could put a damper on sales of pre-construction properties, but the built-in appreciation associated with such assets should ensure that, by delivery date, an investor will have paid far less than the going rate.<\/p>\n New builds are old news<\/strong><\/p>\n The increasing cost of new product and the built-out status of many urban communities has forced developers to move further and further away from city centres. Buyers still want new product, but the distances being placed between where they work and where they can afford to buy are becoming untenable. Melanson\u2019s prediction is that buyers will see less value in new builds if it means being locked into an exurb lifestyle hours from where they actually want to live.<\/p>\n \u201cWhat we\u2019re seeing is people\u2019s flight for affordability is pushing them as far as humanly possible from the city because there\u2019s nowhere else to build,\u201d he says.<\/p>\n That may be, but in Ontario and British Columbia, two provinces with surging populations, it\u2019s safe to assume that there will always be someone willing to drive two hours to work if it means they can get a foot on the property ladder. And there is still plenty of room to build within minutes of most cities in Atlantic Canada.<\/p>\n Condos for families<\/strong><\/p>\n Investors commonly think that the smallest property a family will be interested in renting is a townhouse. Melanson says that is no longer the case, and that new arrivals from overseas are frequently choosing condos as an affordable, convenient alternative to single-family properties.<\/p>\n \u201cNewcomers don\u2019t all have the same view as you and I on what a home\u2019s supposed to be,\u201d he explains. \u201cWe want all this space, and it doesn\u2019t make sense for a lot of people moving from other parts of the world where they never had this space.\u201d<\/p>\n Investors basing their choice between one- and two-bedroom units based on demand, take note.<\/p>\n Prices on the rise<\/strong><\/p>\n Bad news for anyone hoping for a slowdown in the price increases affecting major markets like Montreal, Toronto, Vancouver and Victoria : increased demand will keep pushing home prices higher. The flatness in prices witnessed in Vancouver and Toronto over the first half of 2019 was a blip, a mirage. Investors looking for value will have to set their sights on less densely populated cities.<\/p>\n \u201cEveryone in the world wants to live in Toronto, it would seem,\u201d says Melanson. \u201cAnd there\u2019s nothing you or I could ever do to stop them. I don\u2019t see anything in the foreseeable future that could change that fact.\u201d<\/p>\n PropertyGuys also predicts noticeable price increases in Edmonton and Calgary. Based on recent government cuts and the headwinds that are still battering the province\u2019s oil sector, CREW respectfully disagrees.<\/p>\n The move away from real estate agents<\/strong><\/p>\n \u201cReal estate is a hundred-year old business,\u201d Melanson says. \u201cThe big brands trade the same way today they did almost a hundred years ago. The dynamics of their business being so agent-centric worked when the agent had the goods. They had the listing, they had the smarts, they had the data, and they had the secret data.\u201d<\/p>\n Those days are over. With buyers growing more confident in the data they have access to, paying a realtor to provide similar, if not in identical, information will no longer be an automatic choice \u2013 particularly for new investors who may have never dealt with an agent before.<\/p>\n \u201cYou can learn more, do more, understand more and play the market a lot different than you would have 10 or 20 years ago when your reliance on a real estate agent was at its highest,\u201d says Melanson.<\/p>\n CREW sees a day when buyers and sellers choose to market and list their own properties through an app rather than having to sit through a realtor\u2019s sales pitch. But in our opinion, investors hoping to build a rock-solid, diversified portfolio are better off paying commissions to an investor-focused realtor than paying the higher long-term costs associated with choosing the wrong property.<\/p>\n