The BMO Housing Panel for 2013: in Review

[Tom Napiontek]

With real estate continuing to stay on the forefront of minds and conversations across Canada, it’s most interesting to hear how very different the opinions of experts, pundits, investors, homeowners, and homebuyers are when it comes to the fate and future of the markets. In fact, doing a simple Google search for “Canada real estate news” yields hundreds of thousands of resulting opinion pieces, blogs and articles, running the gamut from “certain death by boom” to “status quo”, with many sitting right in the middle on “steady slowdown.”

 

Experts recently came together from the BMO Financial Group to participate in the inaugural BMO Housing Panel for the 2013 investor outlook. The conversation was open to discussing anything related to Canadian real estate over the past year as well as providing forecasts for the next 12 months. In a somewhat surprising conclusion, the panel didn’t have strong disagreements when it came to the future of the markets. In fact, all agreed that Canada was experiencing a slow-down in most regions that should be expected to continue through 2013.

 

According to Senior Economist, BMO Capital Markets, Sal Guatieri: "In the year ahead, the housing market will be supported by moderate job growth, steady immigration, growing demand from echo boomers entering their prime first-time home buying years, and a gradual shift toward more single-person households."

 

Yet, while the market overview was generally focused around a “soft landing,” there was also unsurprising talk of the markets that seem to be balking this trend. Namely, Alberta. Thanks to its location in the rich Canadian oilfields, Alberta is leading the country in economic growth and will continue to do so for the foreseeable future, while also maintaining a good degree of affordability.  This is something that has real estate investors taking note, and for good reason.

 

What does Alberta teach us as investors? The primary lesson, in my opinion, is not to let your decisions be led by “experts” who are averaging out the real estate market across an entire country. Real estate is local and should be treated as such. You need to perform due diligence, looking closely at the market in which you’re interested in investing. You need to consider the four critical factors: GDP, unemployment, infrastructure investments, and population growth. When you do this, it won’t matter what all the different sides of the argument are saying, because you’ll have all the information you need to make a wise investment decision.