Your home: hot or not?
Financial Post Published: Saturday, November 22, 2008
Financial Post Published: Saturday, November 22, 2008
Can your home weather the financial storm? Don R. Campbell, a real estate analyst and author of Real Estate Investing in Canada, gives a dozen ways to analyze your property's exposure to a downturn.
First, it's vital to remember that property markets are not national; they are regional, local and even vary widely from neighbourhood to neighbourhood in the same city.
That being said, there will always be hot real estate markets and others that are cold, but national and provincial figures are too generalized to be used by Canadian homeowners and investors to make sound decisions on their most important asset.
The 12 questions below will help you decide if your area and personal property are poised to go up, stay flat or collapse.
The more "yes" answers you get, the better the market will perform.
But overall, to dramatically reduce your risk, the most important thing to remember is: Don't fall in love with your property.
12 ESSENTIAL QUESTIONS
1 Is your area's average income increasing faster than the provincial average? 2 Is your area's population growing faster than the provincial average?
3 Is your area creating jobs faster than the provincial average?
4 Does your area have more than one major employer? 5 Is real estate booming in the surrounding region more than where you're looking?
6 Will the property values benefit from a major new development nearby?
7 Has the local and provincial political leadership created a growth atmosphere?
8 Is the region's economic development office helpful and proactive?
9 Is the neighbourhood located in an area of renewal or gentrification?
10 Is there a major transportation improvement occurring nearby?
11 Is the area attractive to Baby Boomers?
12 Is there a short-term perceived problem (negative stories, short-term layoffs) that will disappear?
In fact, there are 13 major influences on the long-term value of property. Underlying the local analysis of your property market you need to consider the outlook for Canada generally.
The Canadian economy and real estate are relatively well-positioned to withstand the economic storms that are buffeting property values in many other countries.
