What developments do you foresee in the 2011 housing market?
It is our belief the market in 2011 will be more reflective of historical averages. We've come through the "boom," and we're approaching the upper limits on affordability; however, interest rates are remaining fairly stable at these low levels.
For 2011, we may see a year similar to 2010, when the activity is busier in the first half due to lower interest rates, however if rates begin to increase in the second half, which many experts are predicting, this could slow activity down again.
We believe the market is moving to a balanced market, which is good for the overall health of the industry. Prospective buyers are already finding they have more choice and less competition.
What would you do if you had to invest money in the Canadian property market in 2011?
What I would do with my money is different than what others may do and that's because we all have different values. I've always believed that it's always a good time to invest in a home, especially if it's your primary residence.
Aside from the satisfaction you have of owning your own home, it remains a fundamental strategy of building personal net worth. With that in mind, prospective buyers need to understand that trying to flip a house in 12 months and expecting to earn 20 per cent return in this market we're heading into is risky. If you invest in property, ensure you have a long-term horizon.
What do you think will be the biggest challenge facing investors in 2011?
Property investors face a similar situation as those looking to buy their primary residence. "What happens if I buy this now and the price falls in the next six months? Should I wait six months to buy?" The good news is that particular challenge is almost non-existent if you go into the transaction with a long-term investment horizon. Buy the right property for the right reasons.
And the biggest opportunity?
The media will do a great job next year telling everyone that the market is "cooling." Skittish investors may retreat. Smart investors will continue to have access to more inventory with less competition.
What are your tips for investors in 2011?
Property investors need to follow the basic principles: Location, location, location and cash flow. Does it meet the needs of prospective tenants? What are the rents in other properties nearby? What are the vacancy rates? What is your time horizon? Do you have the financial flexibility to hang on to this property for three or more years if you had to?
Most importantly, take your time. Make your decision on economic fundamentals, not emotion.
For more insight into the market of 2011, pick up a copy of our January issue, on newsstands now. a
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Investment Hot Spots:
Oak Hill, Witless Bay, Martock, Winsloe North, Upper Whitehead
Boris Bozic, president and CEO of Merix Financial gives his take on the 2011 market, providing you with tips and other info to help you get ahead.