REIN, an independent research and analysis firm, used an equation that measured gross domestic product, employment and population growth, followed by increased rental demand, decreased vacancies, and finally increased rents to determine which cities possessed the most real estate investment potential.
Surrey, B.C.’s second-largest — and fastest growing — city, had the strongest performance, according to REIN’s equation.
“Where we start is economic health of gross domestic product, and with that comes jobs and people, and 12 months down the road you start to see the housing in terms of rental demand and vacancies, and 18 months later is when you see actual property prices increase,” said Jennifer Hunt, REIN’s vice president. “It’s ranked on a very robust methodology that starts with economic health.”
The REIN report, Top Ten British Columbia Towns and Cities, also identifies the best investment strategies for each city based on where they are in the real estate cycle.
“Surrey is in the beginning of a boom,” said Hunt. “Fix and flip is the optimal tactic to use in the Surrey market as it is today because of where it is in the real estate cycle.
In addition to diverse economic opportunity, Surrey is forecasted to surpass Vancouver in population by 2041. Presently, Surrey receives 1,000 new residents each month.
Abbotsford and New Westminster finished second and third, respectively. The report stated that the former is in the end of recovery, therefore, buy and hold and fix and flip are the best investment strategies. Hunt says rent-to-own is a tricky strategy to employ in Abbotsford, but it can still be done with the right property and people.
New Westminster is in the middle of recovery, and the report recommends rent-to-own as the best investment tactic because, Hunt says, “It has the right balance of individuals who are open to employ that tactic, in terms of investors, and it’s the right time in the market when tenant buyers have confidence in the market. It’s the sweet spot in the market.”
Perhaps surprisingly, Vancouver ranked tenth on the list, but Hunt says that it even made the cut-off is a sign of its vitality.
Nevertheless, affordability there remains a persistent problem.
“We know Vancouver is higher priced, so it makes entering that market more difficult,” said Hunt. “However, why it did make the list is it’s absolutely poised for long-term economic growth and it has economic diversity. Vancouver is a unique market.”
She added that all eyes will be on Vancouver’s supply and demand issue — there’s presently an inventory shortage in the city — because more than a million new residents are expected to move into the city’s metropolitan area within the next 24 years.
“The GDP forecasts in Vancouver are great, but they’re higher in Surrey.”
Top Ten British Columbia Towns and Cities
- New Westminster
- The Tri-Cities of Coquitlam, Port Coquitlam and Port Moody
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The Real Estate Investment Network released its top-10 ranking of British Columbia cities, and Surrey finished first.