As the world scrambles to contain the Covid-19 Coronavirus pandemic, everyone is trying to make heads or tails of the economic implications that will result from this outbreak.
What exactly will Covid-19 mean for you as real estate investors?
As countries start imposing travel bans, social distancing, etc., this will greatly reduce global the economic output. People will reduce their spending on restaurants, movies, traveling, shopping at malls, and he the list goes on! As GDP drops, we will see recessions start in the coming months, and possibly much worse for countries on full lockdown such as Italy and Spain!
Buying opportunities for real estate investors
These shutdowns will create real estate buying opportunities galore! As restaurants and shops are unable to pay their rents due to reduced tourism, etc., this will force leveraged commercial lenders into potential foreclosure situations. Same situation applies to residential real estate if people are unable to work. Opportunities will present themselves out there for savvy real estate investors.
Canada, in particular, due to the oil price crash, will have huge opportunities in the coming month. Alberta especially, but this will have a domino affect.
As Governments start to cut interest rates in order to keep economies afloat, money will become very, very cheap! I would anticipate we may see variable rate loans around 2% later this year in Canada!
What will happen when the outbreak slows down?
Once the Covid-19 outbreak slows down and things return to normal (which could be 6 months from now), the results of pent-up demand and low interest rates will likely push the market right back up to where it was before, and possibly much, much higher!
Remember that fortunes are generally made during times of economic uncertainty. We’re not saying to take advantage of what is an unfortunate situation by any means, but just to do your job as an astute real estate investor, and recognize opportunities as they arise! By thinking strategically you will come out ahead.
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