In early and mid-October, the stock market in almost all major industrial countries had something of a hiccup. Well, it wasn’t so much a hiccup as quite nearly a full-blown correction. In the United States, on October 8th, the DOW closed at 16,994; by October 16th, the DOW had fallen to 16,117. Meanwhile in Canada, on October 14th the TSX neared correction territory as it hit an 8-month low of 14,036.68. Other major markets followed a similar pattern.
The good news is that since mid-October, the stock markets – virtually across the board – have more than rebounded from their correction fears. However, there is little doubt that October cast an ugly reminder in the minds of many investors of the unfortunate early days of the 2008 credit crisis.
Certainly (and fortunately), October’s short-term market correction bares little resemblance to the beginnings of the credit crisis seven years ago. Not just because stocks enjoyed a quick rebound, but also because market fundamentals and banks are in a far more financially secure position than in 2008. Still, given the October sell-off, an important question should be raised – that is, how will investors react to a more sustained and even deeper sell-off, if and when one happens in the future. Another question: how will a sustained sell-off affect other investment areas, like real estate or commodities for example.
Real estate investment has long been seen as an alternative investment avenue to the stock market, and right now, the real estate sector, in Canada in particular, is offering two big bonuses for investors. One, urban hubs like Toronto, Vancouver and especially, Calgary and Edmonton are enjoying some of the strongest real estate markets in years; demand remains high in both commercial and residential real estate sectors and Calgary and Edmonton were just reported as being the top two real estate markets in Canada.
Another bonus for investors: mortgage rates remain uncommonly low, and indeed, in the situation where stock markets were to face another correction or in the situation where the global recovery were to fall once more into question, there’s a chance that interest rates could fall even more. Having a chance to invest in property and lock in a historically low interest rate obviously provides a big opportunity for investors and can allow investors to enhance their return on investment.
Richard Crenian, who is the founder and President of ReDev Properties Ltd., a commercial property management company, feels especially confident in the outlook of the Canadian real estate market, especially as an alternative investment avenue to the stock market.
Some industry analysts feel that if the global recovery were to backslide or if the stock market were to face a more prolonged correction, this would have the effect of also dampening the incredibly strong Canadian real estate market. But, Richard Crenian thinks otherwise.
“Stock market fluctuations have historically proven to be far more volatile than real estate investment. But, that’s beside the point – I see the real estate market in major Canadian hubs to remain strong throughout the rest of this year and into 2015. Moreover, the current low interest rate environment in the real estate sector continues to provide strong investment opportunity.”
Richard Crenian adds, “Throughout my career, I’ve always believed in a long-term investment approach. And right now, with current rates, if people approach investing in the real estate market with a long-term approach in mind, I feel there’s a high likelihood that they will enjoy a strong return on investment.”