However, most Canadians are the last to truly believe what we are sitting on. We have been so programmed over our history to look elsewhere for opportunity - always playing small. Well, 2011 - 2020 will be the exact wrong time to be doing so, in fact, we are in the first year of what will prove to be Canada's Economic Decade - one of the best times in history to invest in this country.
Unfortunately, due to a misdirected attitude that cheap equals good when investing in real estate, many Canadian investors have turned their eyes south as real estate prices in the United States continue to plummet.
Investors with their eyes solely on the cheap price of U.S. real estate have flooded Canadian media with their tales of deals and steals. One can only hope that these investors understand the real life metrics involved in analyzing a market's potential (currency risk, taxation, record jobless numbers, massive debt, property supply and demand) and have decided to take the 'buy cheap' risk anyway despite the reality.
This is the equivalent of buying a $1,000 suit for $500 and ignoring the fact that the pants are torn in nine places.
Replacement cost means absolutely nothing if you don't have demand - however it is a wonderful way to sell properties. Investors looking for long-term sustainable wealth for themselves and their families need long-term sustainable economic fundamentals. Using housing stats and prices to predict a real estate market is like driving at full speed and only looking in your rearview mirror - you will crash.
In our 21 years of analyzing and investing real estate markets, our research team has uncovered a predictable long-term pattern for real estate markets across the globe. In fact, the tool we've developed is now used by investors, media and investment firms to dramatically reduce the risks in their real estate portfolios.
Titled The Momentum Formula, it shows the progression of an economy and how it will eventually impact the real estate market. You will note that housing stats are very late in the formula: meaning many commentators and speculators are at least 18+ months behind professional investors.
This analysis tool states: No job growth = high risk real estate market.
GDP growth leads to job growth. These jobs attract population growth, which leads to increased rental demand (12 months later). This demand drives rents up, pushing more to buy properties (18 months later), which eventually leads to property price increases.
Right now, Canada is creating jobs by becoming the world's safe supplier of four key commodities entering supply/ demand super-cycles (food, fuel, fertilizer and forestry).
From this fact, investors will witness select Canadian real estate markets experiencing amazing sustainable growth over the next 10 years. For instance, Alberta, a province of only 3.5 million created more jobs in a month than the total jobs created in the whole U.S. (population over 311 million). Following the formula, this job growth will be reflected in the Alberta real estate market 18 - 24 months from now.
The world's economic outlook will continue to be cloudy for many years to come, risks will seem to be everywhere but so will long-term opportunities. No matter what occurs, the fact that jobs and population growth drive long-term demand will not change.
The other fact that won't change is that Canada has what the world needs to survive and it will be willing to pay for it. Although it will occur in cycles, what you have is an opportunity to be a professional investor (not speculator) who reduces risk and positions yourself for long-term results based not on today's price, but on tomorrow's demand.
To get the rest of Don's expert analysis, pick up a copy of our October issue, on newsstands until Oct. 12.
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Investment Hot Spots:
Sainte-Perpétue, Warsaw, Marlboro, Stickney, Janetville