Wednesday, September 24, 2008

Someone said...

Someone said you should not invest now because history will repeat itself; the recession in the U.S. is expected to hit Canada really hard, putting us in a recession by the next year. The unemployment rate in the U.S. is at an all-time high, Canada has reported that 50,000 jobs were lost in July alone, the biggest number since February 1991.

What does this mean for London? If there is a recession, mortgage rates increase and loans are more difficult to obtain. For people who have over extended, they will start selling assets—typically investment property, then cottage, then home. As a result, real estate prices fall.

However, the London economy is slightly different. A majority of the Canadian job losses were in the manufacturing sector; London is a service economy. The 2 largest employers in London are the London Health Sciences Centre and the University of Western Ontario. 269,000 jobs were created last quarter alone (LEDC).

Student enrollment in a recession rises with funding through student loans. With over 30,000 students at UWO, London is known to be a “University Town”. Investments in student rental properties are essentially recession-proof.

Can we expect real estate prices to crash in the next year? No. It is possible that prices will decrease in some segments. Since London is a service economy and a “University Town”, we won’t get hit as hard as cities with a manufacturing economy, in fact there will be a greater need for student rental properties.

So, is it really a bad time to invest in student rental property? No. With an economy like ours, now is the time to buy.

Interest rates remain low. Average mortgage rate for the past 10 years is 10%, anytime you are below the average you have to be ahead of the game. Take advantage of the present market!

Thursday, September 4, 2008


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