Below is a recent Financial Post article that I found to be a good read.
It is concerning that the stock market returns have gone nowhere “…with the S&P/TSX Composite coming off a terrible turn last Friday to close basically flat year-to-date.” Bare in mind that this was before the 317 or 2.15% S&P/TSX composite index plunge yesterday, the sharpest sell-off this year due to the Greek debt crisis.
Stock market sell offs are not the typical “excitement” most people are looking for when it comes to building long-term wealth and saving for their retirement. The only thing certain is that nothing is certain in these uncertain times.
However, the article goes on to say, “But for now, there are few bright spots in the Canadian economy.
One of those few is real estate. Yes, real estate – …”
That said, the article expresses concerns over real estate values in Toronto and Vancouver, which are in part potentially driven by foreign demand.
The whole foreign buyer thing as the reason why real estate values are going sky high is just fluff in my opinion. It is irrelevant for a very simple “Economics 101” reason.
It is demand that is driving the Toronto real estate market, not foreign buyers. Demand is high. Nearly 100,000 people are migrating to Toronto annually and all of them need a place to live. As long as supply does not exceed demand for housing, the market continues onward on its marry way. Since, all investors require a return on their investment, it is highly doubtful that these real estate investments are being held without being tenanted. Therefore, it makes no difference, whether it is foreign or local investors who are actually doing the buying.
However, by strictly investing in positive cash flowing investment properties, the speculative Toronto real estate market is of little concern or risk to our Cloud9Life.ca members or our real estate investments. In fact, we get to participate in the Toronto housing boom without ever having to buy into the speculative Toronto real estate market!
Indeed, outside of any potential impact to Canada’s mortgage rates or a National or Global Financial Armageddon, the biggest stock market sell-offs in Canada and the US this year are even less concerning or to us.
After all, what has really changed? Not much really. People still need a roof over their heads. Rent will continue being paid by our tenants, our mortgages will continue being paid off, our real estate investments and bank accounts will continue to grow and most of us will continue to sleep well at night knowing that we remain on our paths to financial freedom.
I will personally take my boring, stable, cash flowing real estate investments over any stock market excitement, like the one experienced by the vast majority of stock market/mutual fund investors yesterday, any day. What are your thoughts?
Wishing you and your families an awesome Canada Day! I finding myself fortunate and am grateful to live in a country with so much opportunity. It is definitely a cause for celebration. 🙂
Here is the article for your reading pleasure. Enjoy!