Should YOU Invest in Real Estate RIGHT NOW?

These unprecedented times allow us to question whether it's good to invest into real estate now or wait until all the craziness is over.

Transcription:

Should I invest into real estate right now. That's where the question that a lot of people are asking us right now, a lot of our clients, it's Kenneth Yim, Keller Williams, Broadview Avenue group. And the short answer is yes, you should always buy real estate. And I know it sounds really salesy, but hear me out. Here's some reasons why I think it's a good time to buy real estate. And Oh, at the very end if you stick around. I'll tell you what to buy.

First of all,

If you're lucky to be in the market, it's a great time to do it. The reason why is because you can refinance your property. If you're living in the outer regions of Toronto, you're living in the suburbs, you know, your property values have been skyrocketing because everybody wants to be where you're at. They want a backyard, they want more space. They want another bedroom. They want a den. They want an office. They want to be able to just live life without having to step over each other and live in elevators and all that kind of stuff. Right? I would say open up a line of credit home equity line of credit while you can, or even refinance especially since rates are an all time low. So, you know, your property values have increased by a lot because people are fighting hand over fist. You could see the sign goes up in your neighborhood.

All of a sudden it comes down the next day and it's sold because there's a bidding war. There's always bidding Wars. You're competing with five, six, seven, 10 offers, whatever you lose out on those prices or the new bar, what you're going to be buying. And that's where, you know, prices just keep creeping up. So I'd say while you can, while the prices are still inflated a little bit, take out some money, open a home equity line of credit, just set it aside, just in case an opportunity comes up and I'll let you know when to press the button and pull the trigger. Anyway, at some point I think that the price gap between condos downtown and urban centers and your suburban home is going to shrink right now, the gap is widening. You know, prices are getting higher, whereas downtown thinkers are going lower, but at some point, because affordability is going to go back to this.

Another reason why I would say to buy real estate is because inflation is kicking in the monetary base in Canada as increased. Since a bit, pandemic has started by four and a half times just looking at this graph here. It shows that we were at a hundred billion dollars of money supply, available money out there to buy goods and services for our GDP, all that kind of stuff. And now as of September, there's 430, $6 billion out there in circulation has never been more money out there. So what do you think that's going to do is the prices. I mean, I would think that the available money Chase's available supply of what's out there, it just means that there's more demand, more available money to buy assets. Right? The other thing I would say is that you should be buying for the longterm anyway. Forget about when to jump into the market.

You know, it's a good time to hop in because the downtown condo market has actually dropped by 12.1% since the beginning of March, till about October, right? Um, average price has dropped by 12%. Whereas the overall average in the Toronto real estate board has increased by 8.7%. It smells like an opportunity to meet. So another thing I should say is that the rates are at an all-time low CIPC just came out with a 1.4, 9% or your fixed mortgage for 25 year amortization. I think you can do 1.5, 9% for 30 year amortization. That's crazy. That's like pretty much free money, no interest. Yeah. You have to make it principal payments, but you're not making much in interest payments. So it's gonna be paid off faster. Your payment's going to come down, which is great. But ultimately the interest portion of that mortgage is like pretty much next to nothing.

So it's a wonderful time to buy a large ticket item. I'm not talking about buying a TV. I'm talking about buying a asset that produces income. Oh yeah. Another reason about the market is that the sales new listings ratio for downtown Toronto condos is hovering around 25%. Basically a quarter of whatever's listed, actually sells. And so that brings me to the final point where I think Canada's a one wonderful place to live. It's pretty cool. Actually, I came across the Canada economic recovery plan. So it says here that Canadians are in for a hard winter, but we know that spring will surely follow, which means that there's going to be a bounce back in the spring. That's my prediction. I don't have a crystal ball, so don't hold me to it. And actually say every night lost to this disease is one life too many.

And I agree with that. It's a horrible thing. They made significant investments into these companies that are going to produce it a vaccine. So they have guarantees on 11 doses per capita, which is huge. If you consider that us only has what three, just over three. So that's like four times the amount of vaccines that we might have available to us. We're probably going to be the first ones to get it, which means that everyone's going to want to come in Canada just for health reasons alone. Oh yeah. So I promised you what to buy. And I guess it's more geared towards commercial PWC and the urban land Institute released a 20, 21 emerging trends in real estate. They really sit every year. It's a wonderful read. It's like a hundred and something pages. If you're in the commercial real estate space, you know that it's all about beds and sheds, meaning multi-family and warehousing, industrial warehousing, and fulfillment.

You know that because online shopping is becoming more prominent and wherever you order from Amazon, isn't just going directly from there on a plane and coming into your house in the next 24 hours, right. It's landing here. They pre-bought them to come on a shipment container, whatever it might be and is in a warehouse fulfillment last mile delivery, it's just there. So they need more space in order to bring it to your house within the same day delivery, which is insane that they can do that kind of logistically, but that's a lot more warehouse and space they need. And obviously that's a great that if you can buy into that, if you're in the commercial real estate, otherwise multi-family residential is good for the average investor and institutional investor as well too. Anyway, although the pandemic impacts through immigration and demand for more space and unemployment is going to affect this asset class is going to hammer down the demand for it.

People felt that the shelter still remains a core need, a stable asset class. The demand may shift away from high rise living to lower density housing, but affordability is key. I mean, we all seen that trend. If you can get an affordable multi-family and maybe it's a good time to do that. The other thing that surprised me is medical offices. And I guess it kind of makes sense, right? Because hospitals are facing the space crunch. There may be some opportunities to move some healthcare functions into these facilities. And of course there's an aging population in a boomer generation that needs more healthcare services. And because the hospitals are getting overwhelmed or not giving those services as much, right? So I guess if you're an everyday investor and you don't have this institutional capital behind you, that I would say, you know, start off with a couple of condos.

You know, you should have at least one for every single kid that you have, because by the time the 25, 25 year amortization, or even 30 year arms position, if you start early enough, you'll have built up enough equity for them to live their lives. And if you want to do it for yourself, you wanna do it faster, build up some equity, quickly, get your down payment in there, just buy your place. And then from there you can convert to something else, right? So you can always move up from there. Anyway, those are great things to buy. If you don't have institutional money, if you don't have a pension fund behind you and you not representing one, then residential rental housing is a good way to go. I'm signing out Kenneth yum. Um, I'll talk to you next week. Oh, by the way, big shout out to Sean. Thanks for editing this video. I know I ramble a lot and I know it was a lot of work to actually cut this video down to something that you may or may not want to watch. But thanks so much. I guess I'll talk to you next week until then take care.