Real estate investing is changing the landscape of public and private residential Real Estate. Why multi-family real estate is staying strong.
As our world has shifted with the COVID-19 pandemic, many people are uncertain about how to hedge against the recession. Real assets held for the long term can typically withstand short-term volatility in asset valuations. Private, multi-family properties are not experiencing the same volatility as publicly traded REITS during this period of economic uncertainty. Housing remains a necessity and is in high demand as people are forced to stay home. Real assets held privately aren’t experiencing the same volatility as the public markets.
The COVID-19 crisis
While it is too soon to fully understand the full impacts that the virus will have on the economy, during the writing of this, the economy has taken a large negative hit. There are some asset classes that based on historical data have shown that they are more recession resistant. The Canadian residential rental market showed resiliency through the 2008 recession as described in the below points on rental rates and vacancy rates.
Continued Rent Increase
Historically speaking, there is little to suggest that rental rates will decrease in Canada due to a recession. Average monthly rental rates across Canada have continued to rise since 2006, despite the 2008 recession.
Low Vacancy Rate
Over the last 20 years, Canada has averaged a vacancy rate of 2.7%. The United States, one of the largest economies in the world, has averaged 8.7% over the same span. In the year that followed the 2008 recession, Canada’s vacancy rate remained low at 3%, whereas the U.S. spiked at 10.6%. These comparisons reveal the strength of Canadian residential real estate.
As the global economy retracts, new home construction may slow and first-time home buyers might be forced to wait to purchase homes. As a result, the rental demand across Canada could stay steady or potentially rise.
Westbow Capital Real Estate Trust
Westbow Capital is a Real Estate Trust with a strategy that includes buying, holding, and renting properties in Western Canada. Our management team founded Westbow Construction, which has 40+ years of experience as a builder and developer of residential homes, so have a great understanding of the residential real estate market. With a strong understanding of the Western Canadian real estate market and numerous connections in the industry, the management team can make strategic decisions about what cities and provinces to buy and hold rental properties. Each province has different economic conditions, so the management team will leverage their expertise to use the best investment strategy in the various provinces.