In particular, while Vancouver and Toronto remain “sellers’ markets where there’s not enough product to meet demand,” other parts of the country show considerable potential for returns, according to Phil Soper, president and CEO, Royal LePage
“For most of the country, in real terms, we’re seeing flat appreciation. Prices are moving at approximately the same rate as inflation,” Soper said. Moreover, the CIBC calculated that lower energy prices represented a 9% tax cut for Canadian families, which may serve as an economic driver of certain regions.
Quebec, in particular, posted a “reasonable” year, but should look more optimistic soon.
“We believe that other factors were at play, such as the new government’s mandate to get the provincial books in order and their focus on austerity and fiscal prudence,” Soper said. “Now they’ve reached the halfway point of that mandate, and will begin looking to stimulate Quebec’s economy in the latter half of it.”
While he considers Vancouver to be Canada’s real estate MVP, he believes that “Quebec, and Montreal in particular, is well-poised to be the most improved player year-over-year.”
Moreover, he advises investors who are able to take a more long-term approach to consider Alberta. While cities such as Calgary may be suffering now, he believes that they are destined to an eventual rebound.
“The softness of the Calgary market would lead some to be brave and look there for investment opportunities, but I’d say the first half of 2016 is too soon,” he said.
Soper is “very bullish” on Alberta over the long-run, since he believes it has a diversified economy and educated workforce that will allow it to recover from oil’s downturn.
“There’s a difficult adjustment right now with the dramatic reduction in the value of its primary export product, but along with the instability of bounding prices and uncertain markets, you have a period where uncertainty can lead to opportunities for investors,” he said. “Right now is fairly risky, however, as I think there’s more downside to come.”
Still, despite the high barrier to entry, investors may not want to turn a blind eye to Vancouver and Toronto just yet.
“We have a general manager in Vancouver who told me, ‘I don’t have a crystal ball and I don’t know if or when market correction is coming, but I do know that people who thought they were going to wait because things were too expensive a year ago are finding it’s a much tougher entry into the market today,” Soper said.
Along with Southern Ontario’s “Golden Horseshoe,” Soper predicts that the two will remain “very good prospects for 2016, even though it’s more expensive than other areas of the country.”
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Investment Hot Spots:
Bucklaw, Centreville, Simonds, Baddeck Bay, Virginiatown
Although Royal LePage admits that Canada’s housing market “unfolded closely along the lines as we expected,” in the fourth quarter of 2015, the data still contains valuable information for investors looking ahead to 2016 and beyond.