Another Trip Around the Sun. The Worst Year for Real Estate in My Experience.

It’s not all bad 🙂

Thank you to everyone who took time out of their busy schedules to wish me a happy birthday. The vast majority of messages came from the real estate investing community, and reading all the comments and seeing the names brought back a lot of memories—many from easier times for real estate investors.

My fellow escape-room-loving, nerdy friends attempted to be among the elite 4% who successfully escape... #FAIL

 

This mango cake tasted better than it looks

 

The Problem: The Changing Real Estate Landscape, for the Worse

Since the peak of the market around late 2021 to early 2022, prices have declined while the cost of operating a rental property has continued to rise. Rent control has squeezed landlord incomes, leaving many of my clients and fellow investors struggling. We real estate investors never signed up to backstop inflation for our customers, and not once has anyone said, "Thank you."

Some of my clients have endured nightmare tenant situations: one tenant owes over $30,000 in rent; another caused $20,000 in damages; and another had terminal health issues, not paying rent, leaving the house in such a disastrous state that it had to be sold as-is. Our client unwittingly became a social service provider overnight, and they’ll never be Ontario landlords again. Why buy and hold a move-in-ready property for ten years only to experience this kind of grief? This is not what my private citizen client signed up for.

In the areas where Ontario where majority of cash flow oriented investors invest like Oshawa, Barrie, Hamilton and Kitchener are well off their peak prices.  Duplexes especially. In Hamilton where the majority of my clients and my duplexes are located we're 20% off peak prices and we're experiencing low showing volume of our tenanted and vacant duplex listings.

Market rents are coming down on long-term rentals too as international students aren't coming to Canada in droves any more but our university (not college, we're not a fan of college student rentals) student rental rents have still climbed slightly, even over last year's historic increases.  I was finally able to get rent PLUS utilities on my McMaster University rental.  Those same tenants have already renewed for the following school year.  I feel bad for parents of university students as I review rental rates for upcoming listings we have near Brock and Western University at $700 and up per room. (Please let me know if you have anyone looking to buy a student rental near Brock and Western University :). University student rentals are my favourite local investment strategy for both cash flow and limited landlord tenant board risk.  From what I see in the local market, student rentals have the most demand from investor buyers.

This is the most buyer advantaged market I've seen other than 2008 and early covid but with the Landlord Tenant Board risk and cash flow, rents across the country are declining but not that far off historic highs, so overall housing affordability is still bad on the historic side.  So no surprise, I've never seen such low local investor buyer interest.

As such, Realtors and full time investors have returned or pursued other careers. My own team of