Local Canadian Real Estate Investing

Jeepers, has it been a busy week! (I don't normally say 'Jeepers' but someone in our office used it this week and for some reason, it is the first word that came to mind)

Tom and I have been working hard putting the final touches on the Rock Star Inner Circle which launched yesterday. The feedback we got was that people were shocked at the low price. One person even commented that he thought there was a typo on the website as he couldn't believe we would be sending something out EVERY WEEK!! If you want to see what he was talking about click here to check out the Rock Star Inner Circle.

I found an interesting chart this morning that might be able to shed some light on the reality of the Canadian Real Estate market. Here it is:


This chart represents the change in prices for new homes for February 2009.  That's a super important point so I have to repeat it,  please remember the price changes indicated here have NOTHING to do with the resale market.

The reason I wanted to share this image with you is that it proves one of the biggest misconceptions about Canadian Real Estate prices.  It confirms that real estate prices are not, can not, and will never be a national number.

Listen Canada is a big place with A LOT going on.  There are different economic fundamentals in different areas that have different impacts on price fluctuations.

Let's take two extreme cases from the chart.  You can see that new home prices in St. Johns are up 20% while they are down 12% in Edmonton.

Yes, St John's had an increase of 20% even though the headlines splashed across the newspaper state that Canadian prices are 'plummeting'.

Unfortunately, is this single chart you also can't see the historic price rise in Edmonton over the last few years prior to this adjustment, if so, you would know that anyone who bought prior to mass speculation entering the market did extremely well for themselves.

There are a lot of points to make with this chart but time is very limited for me today so I will end with one other important point.

This chart (from by the way) shows that the Toronto & Oshawa area had an increase of 0.8%.  Well, what does that really mean?

That is a very big area to group into one category.  Just think there are condos, townhomes, single family homes, etc. in different areas like Etobicoke, Scarborough, Oshawa, or even smaller areas such as the Danforth, Bloor West Village, Yorkville, I think you get the idea.

How is it possible that all these prices are moving up 0.8% at the exact same rate? You're right! It's not!

This pricing chart does a great job reminding us all that real estate and real estate investing is a local game.  A game of niches, sometimes of a few city blocks.

But it is up to us as local Canadian real estate investors to do our own due diligence about the types of areas and properties we are investing in because there are many distinguishing factors.

So next time someone asks you "How's the real estate market?" you may want to help them out and explain to them that the question they are asking doesn't really make that much sense.

Unfortunately, many people may not totally 'get it'.  But the important thing is that you do, and that will help you rise above the masses.

- Nick Karadza

P.S. If you are looking for more information on evaluating and selecting invest areas you will want to check out the Rock Star Inner Circle.  The information may be the difference maker you have been looking for.  Don't forget it is your life, live it your way

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