For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).
By Kim Catechis, Investment Strategist, Franklin Templeton Institute
and Andrew Buntain, Institutional Portfolio Manager,
Franklin Bissett Investment Management
(Sponsor Content)
The world is living in volatile times.
East-West geopolitical tensions, which had been building even before the COVID-19 pandemic upended the lives of millions around the globe, have exploded into war in Europe. The Russia/Ukraine conflict is now well into its sixth month, with no end in sight. Severe sanctions disconnecting Russia from the West are structural and unlikely to be removed even after the conflict is resolved.
There are real consequences for the world from this conflict. Ukraine’s economy has been ravaged. Europe is back to having a militarized border. NATO has grown stronger and is spending on defence; more than 2% of Gross Domestic Product (GDP) is expected to be allocated to military expenses by member nations. Supply chain disruptions have been exacerbated by the upheaval, with an energy crisis in Europe, fears of famine in Africa, shortages of critical products in many industries and the highest inflation levels in over 40 years.
Growth expectations are falling on the growing realization that central banks are not well placed to deal with food price and energy inflation, despite aggressive policy rate hikes. In many countries, including Canada, fears of recession have replaced fears of overheated economies.
Higher commodity prices a boon for producer nations
Prices for the world’s basic commodities — energy, food, metals and minerals, forest products — soared in the first half of the year. In recent months, they have fallen somewhat but remain high, and this situation is likely to continue. Trade patterns in place for 49 years have been destroyed, and new alliances and infrastructure take time to build. As with any change, there will be winners and losers. For commodity producers like Canada, the evolving dynamics open doors to new opportunities.
Energy hits critical mass
Europe has gone on a buyers’ strike against Russia. In response, Russia is turning off the fossil fuel taps. While not a huge obstacle to oil procurement (there is plenty of oil in the world), natural gas is another matter. Russia controls 30% of the world’s natural gas reserves, and all but one of its gas pipelines go to western Europe.
Filling the huge supply gap left by Russia presents a once-in-a-lifetime opportunity for other producers to capture market share in one of the world’s most profitable regions; however, the lack of pipelines to other natural gas-producing regions means that liquid natural gas (LNG) must be transported by ship.
Largely because of transport costs, nearby producers with spare capacity like Qatar, Algeria, and Nigeria, will likely be the winners rather than Canada. In any case, Canada still benefits from the cascading effect of higher fuel prices. In the meantime, close to 20 projects have been proposed in Canada to export LNG through both coasts. Without doubt, there will be other opportunities.
“E” is for environmental backlash
As winter approaches and energy concerns grow, concerns have arisen that attractive prices and the renewed drive to obtain reliable fossil fuel supplies will set back efforts to combat climate change. For Europeans, there is no alternative to ESG; the “green deal” already in place prior to the war has been accelerated. Concurrently, however, a strong view is building that the definition of ESG needs to evolve, with many preferring “sustainability” and a focus on inclusion, rather than the exclusion often associated with ESG.
Overall, Canada’s oil and gas extraction and refining methods are considered very environmentally friendly. One example is a long-time holding in the Franklin Bissett portfolios, ARC Resources Ltd. Rather than pay others to dispose of wastewater from the drilling process, the company’s Montney operation recycles and reuses the water.
The other two letters in ESG — “S” for social and “G” for governance — should not be ignored. In an era where enormous value is being placed on reliability, a stable workforce and good corporate governance have become at least as important as efficiency. Under these criteria as well, Canada performs better than most; the Canadian oil and gas industry is recognized globally for strong social progress and governance metrics.
Agriculture: food for thought
The global response to threats of food shortages has been to advocate opening up more land for crops, but the planet has a limited amount of cropland. Significantly, almost half of the grains produced worldwide are used for animal feed, which people then consume indirectly by eating meat. In Europe, we are seeing an increase in vegetarianism; if meat consumption were to decline further because of the current situation, it could potentially lead to new patterns of behaviour that imply lower demand for animal feed. Elsewhere, food insecurity is growing, especially across Africa.
Ukraine is a major producer of sunflower oils, barley and maize (corn). Grain prices peaked in June as the United Nations struck a deal to allow some Ukraine grain shipments from Mariupol, but there is no guarantee it will continue. In countries most at risk of shortages from the disruptions, such as Nigeria and Bangladesh, people already tend to pay the largest proportion of their budgets for food. Turkey and Egypt are also very exposed to Russian wheat and have little reserve stock. Continue Reading…
As we update our list of the Best Canadian Dividend Stocks for 2022, we continue to focus on four key areas:
Dividend Yield
Dividend Growth Consistency
Earnings Per Share
Overall Company Revenues
As we head into Q3, Canadian dividend stocks have continued to reward our confidence in them. While high-flying tech stocks have gotten slaughtered (and then recovered a little bit), and European stocks continue to see their growth evaporate, Canadian oligopolies continue to churn out dependable dividend growth. With Canadian forward P/E now at 12 – well below their historical average of 14 – there is no better place to be in terms of equity exposure if you prize caution and dividend yield.
While they have suffered drawdowns at times due to market-wide momentum, they have held up quite well, and earnings reports have supported the long-term viability of their dividends.
While many companies around the world are seeing their bottom lines chewed up by increasing costs, our top Canadian dividend stocks continue to show the pricing power that made us so confident in recommending them in the first place.
As a longtime dividend investor (I’ve had a Canadian dividend investing portfolio for over 15 years now, since I started the Smith Manoeuvre) I’ve learned that while current dividend yield is a beautiful thing, it’s the long-term dividend growth and earnings per share (EPS) that will really drive your overall portfolio returns.
My personal selection for the top dividend stocks for long-term investments are available below.
Our Top 10 Canadian Dividend Growth Stocks (September 2022)
Here’s a look at our top 10 long-term Canadian dividend stocks in order of their dividend increase streak.
For my full 32-stock list of Canadian dividend earners that I’m buying today – as well as the 74-stock list of US Dividend all stars that I recommend – check out the platform that I personally use to do my dividend stock research.
Note: Data on this article updates periodically. If you are looking for real time data and guidance, read our recommendation below.
More Up to Date Canadian Dividend Stocks Data
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2022 Canadian Dividend Update
The war in Ukraine has shaken markets around the world, and with the word “recession” appearing every two paragraphs in most financial publications, people have pulled money out of markets to some degree. (Although perhaps not as much as the initial “meltdown skeptics” initially anticipated.)
This has resulted in some stocks seeing their valuations get beat up despite actually increasing both their revenues and operating profits. You can see from the chart below for example that Canadian banks stocks just continue to print free cash flow and increase dividends at a safe (but lucrative) rate.
Given their very attractive current valuations, you’d have to expect a recession to crater their earnings by 20%+ for this to make sense – and I just don’t see that happening.
Bank
Dividend Increase
EPS
2017 Dividend
2021 Dividend
2022 Dividend
Payout Ratio
BMO.TO
25.47%
53.28%
$0.88
$1.06
$1.33
36.56%
NA.TO
22.54%
57.29%
$0.56
$0.71
$0.87
31.37%
TD.TO
12.66%
20.06%
$0.55
$0.79
$0.89
40.86%
RY.TO
11.11%
41.39%
$0.83
$1.08
$1.20
39.02%
BNS.TO
11.11%
45.30%
$0.76
$0.90
$1.00
46.54%
CM.TO
10.27%
69.38%
$1.27
$1.46
$1.61
41.81%
With payout ratios like the ones above, combined with those really solid Earnings Per Share numbers – we remain strong in our belief that there are no better options for investors who want stable long-term growth combined with free cash flow.
With inflation fears now dominating the media news cycle, we see more than ever that companies with solid balance sheets and oligopoly-driven moat stocks are the smart long-term play. Companies that can pass along those inflation-fuelled rise in costs have historically outperformed during inflation cycles.
Frankly, I think all of this talk about inflation might be a bit overdone, and that it’s likely to come down to the 3-3.5% range next year. At that rate, it’s really only a mild concern in the grand scheme of things. I’d be much more worried if this was deflation we were talking about!
Our list of top Canadian inflation stocks explains exactly which companies we believe are best positioned in order to pass along the inevitable price increases and increased costs that will come along in 2022.
Of course we remain committed to our long-term strategy of balancing EPS with a company’s ability to grow its dividend, in order to allocate our personal dividend nest egg.
Afterall, the only thing better than a high dividend yield today, is a much larger (and increasing) one tomorrow!
Check out our in-depth Dividend Stocks Rock Review for a deeper dive on just why we trust the service so much, and more details on our exclusive promo offer code.
My Top Canadian Dividend Stock Recommendations
Sorted in order of dividend streak:
Fortis (FTS.TO) – 48 Years of Dividend Growth
3.67% Dividend Yield
6.68% 5 Year Revenue Growth
6.10% 5 Year Dividend Growth
79.85% Payout Ratio
22.06 P/E
Investment Thesis:
Fortis aggressively invested over the past few years resulting in strong and solid growth from its core business. You can expect FTS’s revenues to continue to grow as it continues to expand. Strong from its Canadian based businesses, the company has generated sustainable cash flows leading to four decades of dividend payments.
The company has a five-year capital investment plan of approximately $19.6 billion for the period 2021 through 2025. Only 33% of its CAPEX plan will be financed through debt. Nearly two-thirds will come from cash from operations. Chances are most of its acquisitions will happen in the US.
We also like the FTS goal of increasing its exposure to renewable energy from 2% of its assets in 2019 to 7% in 2035. The FTS yield isn’t impressive at around 3.70%, but there is a price to pay for such a high-quality dividend grower.
Dividend Growth Perspective:
Management increased its dividend 6% in 2019 and 2020 and has declared that it expects to increase dividends by 6% annually until 2025. We like it when companies show motivation for growth (through acquisitions) and reward shareholders at the same time!
After all, Fortis is among those rare Canadian companies who can claim it has increased its dividend for 48 consecutive years. Fortis is a great example of a “sleep well at night” stock.
Enbridge (ENB.TO) – 26 Years of Dividend Increases
6.38% Dividend Yield
6.37% 5 Year Revenue Growth
9.52% 5 Year Dividend Growth
117.23% Payout Ratio
22.30 P/E
Investment Thesis:
ENB’s customers enter 20-25-year transportation contracts. It is already well positioned to benefit from the renewed profits of the Canadian Oil Sands (as its Mainline covers 70% of Canada’s pipeline network).
As production grows, the need for ENB’s pipelines remains strong.
After the merger with Spectra, about a third of its business model will come from natural gas transportation. Enbridge has a handful of projects on the table or in development. It must deal with regulators notably for their Line 3 and Line 5 projects. Both projects are slowly but surely developing.
The cancellation of the Keystone XL pipeline (TC Energy) secures more business for ENB for its liquid pipelines. ENB has now a “greener” focus with their investments in renewable energy. The stock offers a yield over 6% which makes it a strong candidate for any retirement portfolio.
Dividend Growth Perspective:
The company has been paying dividends for the past 65 years and has 26 consecutive years with an increase. While it’s probable dividend growth won’t be as generous as compared to the past three years (10%/year), the current generous yield makes up for it. Management aims at distributing 65% of its distributable cash flow, leaving enough room for CAPEX.
Look for their latest quarterly presentation for their payout ratio calculation. Management expects distributable cash flow growth of 5-7%. Therefore, you can expect a similar dividend growth rate. We have used more conservative numbers in our DDM calculation.
Canadian National Railway (CNR.TO) – 26 Years of Dividend Increases
1.90% Dividend Yield
3.76% 5 Year Revenue Growth
10.40% 5 Year Dividend Growth
35.57% Payout Ratio
21.17 P/E
Investment Thesis:
Canadian National has been known for being the “best-in-class” for operating ratios for many years. CNR has continuously worked on improving its margins. The company also owns unmatched quality railroads assets.
CNR has a very strong economic moat as railways are virtually impossible to replicate. Therefore, you can count on increasing cash flows each year. Plus, there isn’t any more efficient way to transport commodities than by train. The good thing about CNR is that you can always wait for a down cycle to pick up some shares. There’s always a good occasion around the corner when we look at railroads as attractive investments.
Finally, the cancellation of the Keystone XL pipeline has driven more oil transportation toward railroads. CNR has benefitted from this tailwind.
In 2021 CNR entered a bidding war against CP to buy the Kansas City Southern Railroad. When the deal fell through for CNR, and the company announced a renewed focus on efficiency, long-term investors were rewarded handsomely as the stock shot up in value.
Dividend Growth Perspective:
CNR has successfully increased its dividend yearly since 1996. The management team makes sure to use a good part of its cash flow to maintain and improve railways, all while rewarding shareholders with generous dividend payments.
CNR shows impressive dividend records with very low payout ratios. While the business could face headwinds from time to time, its dividend payment will not be affected. Shareholders can expect more high-single-digit dividend increases.
Telus (T.TO) – 18 Years of Dividend Increases
4.58% Dividend Yield
5.76% 5 Year Revenue Growth
6.68% 5 Year Dividend Growth
103.38% Payout Ratio
22.10 P/E
Investment Thesis:
Telus has grown its revenues, earnings, and dividend payouts on a very consistent basis. It is very strong in the wireless industry and is now attacking other growth vectors such as the internet and television services.
The company has the best customer service in the wireless industry as defined by their low churn rate. It uses its core business to cross-sell its wireline services. Telus is particularly strong in Western Canada, but has the recent Rogers turmoil to increase market share throughout the country.
Telus is well-positioned to surf the 5G technology tailwind. This Canadian telecom stalwart looks at original (and profitable) ways to diversify its business. Telus Health, Telus Agriculture and Telus International (artificial intelligence) (TIXT.TO) are small, but emerging divisions that should lead to more growth going forward.
Dividend Growth Perspective:
This Canadian Aristocrat is by far the industry’s best long-term dividend-payer (as opposed to short-term yield). Telus has a high cash payout ratio as it puts more cash into investments and capital expenditures.
Capital expenditures are always taking away significant amounts of cash due to their massive investment in broadband infrastructure and network enhancement. Such investments are crucial in this business.
Telus fills the cash flow gap with financing for now. At the same time, Telus keeps increasing its dividend twice a year showing strong confidence from management.
Emera (EMA.TO) – 15 Years of Dividend Increases
4.31% Dividend Yield
6.15% 5 Year Revenue Growth
5.24% 5 Year Dividend Growth
128.82% Payout Ratio
29.42 P/E
Investment Thesis:
Emera is a very interesting utility with a solid core business established on both sides of the border. EMA now shows $32 billion in assets and will generate annual revenues of about $6 billion. It is well established in Nova Scotia, Florida, and four Caribbean countries.
This utility is counting on several “green projects” consisting of both hydroelectric and solar plants. Between 2021 and 2023 management expects to invest $7.4 to $8.6B in new projects to drive additional growth. These investments decrease the risk of future regulations affecting its business as the world is slowly moving toward greener energy.
Most of its CAPEX plan will be deployed in Florida where Emera is already well established. In general, Florida offers a highly constructive regulatory environment. In other words, EMA shouldn’t have any problems raising rates. This is another “sleep well at night” investment.
Dividend Growth Perspective:
Emera has been increasing its dividend payments each year for over a decade. With the purchase of TECO energy management intends to continue that tradition. The company forecasts a 4-5% dividend growth rate through 2022, while targeting a payout ratio of 70-75%.
At a 4%+ dividend yield, this is a keeper for several years. Don’t get fooled by the high payout ratio, as the adjusted earnings show a payout ratio around 80% including the recent dividend growth. This is the type of company that fits perfectly in a retirement portfolio.
There are plenty of perks to being your own boss, including the ability to build up tangible assets to invest in your personal portfolio, your corporate accounts, or both. But if you are a small- to mid-sized Canada-controlled private corporation (CCPC) owner, how do you know if you’re managing your personal and corporation investments as tax-efficiently as possible? Let’s take a look at that today.
Your Accountant and your Financial Advisor: A powerful pairing
In my experience, successful business owners usually have their corporate tax planning practices well in hand. Any number of reputable accounting firms can help you tax-efficiently structure your CCPC, manage its revenue and expenses, and accurately report its activities to the proper authorities. Your accountant also should be able to help you plug a lot of the taxable leaks that can otherwise siphon away excessive individual or corporate wealth.
However, I have noticed a business owner’s best, most tax-efficient corporation investment strategies often slip through unattended.
That’s no knock against accounting firms. It’s not typically in their purview to optimize tax-efficient investing across your (and potentially your spouse’s) taxable personal and corporation investment accounts, tax-favoured RRSPs and TFSAs, etc. That’s where an independent financial advisor, like Lowrie Financial, comes in. Your CA or tax attorney has the specialized expertise needed to tend to your corporate assets. We focus on the intersection between your corporation tax planning and your greater wealth planning … including how to manage all your investments as tax-efficiently as possible.
Tax-Efficient Investing: Tax Planning vs. Predicting
Before we dive into the details, I’d like to emphasize that none of us has a magic wand to make your tax bill disappear entirely. Nor do I possess a Ouija board to divine future tax code changes. Instead, I believe it’s best to avoid overly clever or predictive tax-cutting ploys that seem too good to be true — because they probably are — and focus on what we can manage here and now.
So, what are the solid tax-efficient strategies within our control? Most are the same whether you’re investing as a business entity or an individual. I’ve already covered many of them in “Tax Strategies to Boost Your Financial Savings.” Still, common-sense advice has a way of getting buried under all the financial nonsense, so let’s revisit the following four tax-planning strategies for a business owner’s personal and corporate investments alike:
1.) Don’t let Short-Lived adventures distract you from your Long-Term Financial Goals
Who isn’t attracted to the idea of scoring big on an action-packed investment? When things are going up, it’s fun, like finding extra money you’d forgotten about in your sock drawer. Managing your investments for gradual growth is more like watching paint drying on the wall.
Unfortunately, as I described in “Investment Fads and Other Destructive Behaviours,” corporate and individual investors who chase after short-term returns aren’t likely to serve their long-term financial goals. Instead, they end up with what I call a “dog’s breakfast portfolio” of whatever investments have been randomly hot or not over the past several years.
In the long run, this approach not only leaves you anxious and uncertain about how your investments are holding up, but it’s also usually not as tax-efficient. Instead of giving you the confidence to minimize your trading and adhere to some of the other best practices I’ll cover next, you end up jumping in and out of markets and positions, disregarding the tax ramifications, and assuming your accountant will dig you out of whatever mess you’ve created.
How do you avoid this trap? Financial planning for business owners (or anyone else) means having an investment plan to guide the way, shaped by an evidence-based strategy; and sticking with your plan over time, adjusting it only as your business or personal goals evolve.
2.) Keep your Friends close and your Taxable Capital Gains closer
Understandably, you may think of your taxable investments’ capital gains as a burden. But as I covered in “Tax Strategies to Boost Your Financial Savings”, they can actually be one of your best tax-planning friends.
Some recent good news was that there were no changes in the recent 2022 Federal Budget on the capital gain inclusion rates. So capital gains are still taxed at half of your personal or corporate tax rate. For example, if your personal or general corporate rate is 50%, then you will pay 25% on capital gains. Yes, you read that correctly, 50% less tax! I have yet to find anyone who wouldn’t opt to pay 50% less tax on anything when they’re able.
This concept applies to realized capital gains, and even more so to unrealized gains you can defer for now. Like the snowball effect of compounding interest (earning interest on interest earned), you or your business can build up a compounding tax arbitrage by putting off paying taxes on unrealized gains, which can then stay invested to accumulate even more tax-friendly gains.
You don’t want to be penny wise and pound foolish by chasing after tax savings that don’t serve your greater wealth interests. So, it remains wise to first ground all your investment decisions in your financial goals, with a portfolio built and managed accordingly. Then, the more effectively you can leave your corporate assets untouched to create gains, the more tax-efficient your results are likely to be when you do sell taxable positions according to your disciplined investment plan.
3.) Marginal Tax Rates matter
Supplementing our first two points, it’s also worth keeping an eye on the marginal tax rates you land in, based on your individual and corporate income.
For your personal income, this is especially important if it’s hovering right around the perimeters of those marginal rate points. In Ontario, if you make over $221,709 in 2022, you’ll be in the top bracket. It’s worth being aware of when you may be getting close to that threshold, so you can sharpen your income tax planning pencil, typically in concert with your financial advisor and accountant team. Continue Reading…
It’s a trade-off. I hold a concentrated portfolio of Canadian stocks. What I give up in greater diversification, I gain in the business strength and potential for the companies that I own to not fail. They have wide moats or exist in an oligopoly situation. For the majority of the Canadian component of my RRSP account I own 7 companies in the banking, telco and pipeline space. I like to call it the Canadian wide moat portfolio.
(updated August 24, 2022) Like many Canadian investors I discovered over the years that my Canadian stocks that pay very generous dividends were beating the performance of the market. You’ll find that market-beating event demonstrated by the Beat The TSX Portfolio. Eventually, I moved to the stock portfolio approach.
Over longer periods you’ll see that BTSX beat the TSX 60 by 2% annually or more. And as always, past performance does not guarantee future returns.
For the bulk of my Canadian contingent I hold 7 stocks.
Canadian banking
Royal Bank of Canada, Toronto-Dominion Bank and Scotiabank.
Telco space
Bell Canada and Telus.
Pipelines
Canada’s two big pipelines are Enbridge and TC Energy (formerly TransCanada Pipelines).
For the U.S. component there is a basket of U.S. stocks. Here’s an update of our U.S. stock portfolio. That portfolio continues to provide impressive market-beating performance.
Here’s the Canadian wide moat 7 from 2014 vs the TSX Composite, to the end of July 2022. I slightly overweight to the telcos and banks. The portfolio for demonstration purposes is rebalanced every year. When reinvesting I usually throw money at the most beaten-up stock. That would be a reinvestment strategy that seeks value and greater income, the general approach of the Beat The TSX Portfolio.
2021 was a very good year for the wide moat portfolio. It beat the TSX, but did underperform the Beat The TSX Portfolio model and Vanguard’s High Dividend ETF (VDY). The outperformance of the Wide Moat 7, over the market, is accelerating in 2022.
In 2022 the Canadian Wide Moat 7 is up 1.14%. The TSX Composite is down 5.56%. For the record, the Vanguard High Dividend (VDY) is up 2% in 2022 to the end of July.
Charts courtesy of Portfolio Visualizer
Annualized returns and volatility
The Canadian Wide Moat 7 has delivered greater total returns and with less volatility and less drawdowns in corrections. The market beat is somewhat consistent with the Beat The TSX Portfolio beat of over 2% per year.
And of course the portfolio dividend income is more than impressive. I did not create portfolio exclusively based on the generous and growing income, but it is a wonderful by-product. The following is based on a hypothetical $10,000 portfolio start amount. The starting yield is above 4%, growing towards a 10% yield (on cost) based on the 2014 start date.
In the above, the dividends are reinvested. For example, the Telus dividend is reinvested in Telus. While I will take a total return approach for retirement funding, the generous portfolio income contribution will add a dimension that will help reduce the sequence-of-returns risk. I am in the semi-retirement stage.
Performance update to the end of May 2022
In this chart I begin with the inception date of the Vanguard High Yield VDY, 2013. We see the Canadian Wide Moat 7 vs VDY and the TSX Composite – XIC.
The Wide Moat stocks have outpeformed for the full period, but that is thanks mostly to better returns out of the gate. The outperformance is also aided by lesser drawdowns in market corrections. We see that both the Wide Moat approach and VDY have beat the market, with ease.
Wide Moats with an energy kick
I also hold Canadian energy stocks in the mix. That energy allocation is near 10%. Here’s what it looks like over the last year with that energy kicker. The following table looks at from January of 2021 to the end of July 2022. Continue Reading…
What is one prediction you have for the housing market in the next five years? To help you stay abreast of developments in the housing market, we asked real estate professionals and business leaders this question for their best predictions. From more people heading south to buyers shifting toward simple and functional homes, there are several insightful predictions that may help inform your decisions as a buyer, homeowner, developer or other stakeholder in the housing market within the next 5 years. Here are nine housing market predictions for the next 5 years:
People Will Be Heading South
Expect a Good Degree of Stabilization
Lending Requirements Will Get Tighter
Home Values are Steadily Rising and Stabilizing
Look for Sell-Off by Big Owners
More Smaller and Affordable Houses
Expect More Use of Digital Tools to Promote Sales
Home Prices Will Continue Upward but Much More Gradually
Tastes Will Shift Toward Simple and Functional Homes
People will be Heading South
With remote work becoming the norm, we’ll continue to see people fleeing big cities for more land, warmer weather, and better amenities. Southern states such as Florida, South Carolina, Alabama, and Tennessee will see an increase in home buyers. Fewer people will be moving to the Northeast in favor of a lower cost of living, mild winters, and the ability to be outside 365 days of the year. — Isaiah Henry, Seabreeze Management
Expect a good degree of Stabilization
I think the market will stabilize somewhat, short of any significant downturn. Prices have shot up dramatically in recent years, so if they come down a bit now, that’s not a crash, it’s just a return to Earth. Anyone fearing something like the crash of 2008 should rest easy, as the same conditions are simply not there in terms of inventory, unemployment, and subprime lending. Expect prices in the near future to be somewhat closer to normal, but not dramatically so. — Marcus Hutsen, Patriot Coolers
Lending Requirements will get Tighter
One prediction I have for the housing market is that lending requirements will become tighter. This is because, after a period of loose lending standards, there has been an increase in the number of people defaulting on their mortgages. Lenders are becoming more cautious, and as a result, it will become harder for people to get mortgages. This could lead to a slowdown in the housing market, as fewer people will be able to buy homes. However, it could also create opportunities for investors who are willing to buy properties and rent them out. In any case, the housing market activity is likely to slow down in the next few years. — Lorien Strydom, Financer.com
Home Values are steadily rising and stabilizing
While we can’t magically forecast the future of real estate, it’s pretty safe to assume that home values are going up steadily just as they historically have. That doesn’t mean we won’t see the typical peaks and valleys that result from economic and other variable factors, rather confirm that the housing market fluctuates slightly over time which is normal. Those concerned the 2008 crisis could repeat can be at ease when considering the regulatory measures taken since to avoid straining our economy. It seems unlikely we would see such an event in the US again, and though buyer trends have been irregular in recent years, the data would support steady home values for the foreseeable future. — Tommy Chang, Homelister
Look for Sell-Off by Big Owners
One prediction I have is that the big companies that have been paying outrageous amounts for homes will suffer financially and need to sell them off. The idea behind these conglomerates, which some are foreign-owned, is to buy up private properties and either rent them or flip them for a profit. That is what has caused rents to soar and has pushed many would-be homeowners or independent house flippers out of the market because they can’t compete with the bid price. Continue Reading…
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