It’s what Taleb advised us to do in his book, which was published prior to the 2008/2009 recession and before the 2013 MERS pandemic killed just under 1,000, as the European Centre for Disease Prevention and Control (ECDC) reports. According to Taleb, we must always assume a black swan event is a possibility and plan accordingly.
For those looking to buy a home now or in the near future, this means taking a good, long, hard look at your financial situation. Can you afford to spend that down payment you’ve saved on an asset that may lose significant value in the short-term (but, eventually rebound in value and, if history repeats, will continue to appreciate, at least moderately, far into the future)? Are you certain that you will remain employed in the near future? If you lose your job, will you still be able to afford your mortgage payment and all other costs associated with home ownership? Finally, based on the current situation, will you be able to secure mortgage financing both now, when you want to prequalify, and in the near future, when you are much closer to the closing date of the deal?
Based on some honest answers to these and other questions, there will be buyers ready and willing to take the plunge into home ownership. There will also be cash-rich investors ready and waiting to find good deals on highly valued assets with short-term drops in value. These are the home buyers that need to consider the importance of the underlying fundamentals. This is where our annual report on real estate will help, a lot.
The MoneySense “Where to buy” report gives you the hard numbers to help guide your decision. We use data from Statistics Canada and the Canada Mortgage and Housing Corporation (CMHC) to analyze the real estate markets in Canada’s largest 35 municipal areas. In addition, we examined more than 1,500 neighbourhoods in five of Canada’s largest cities, based on three criteria:
- Value. Affordability is a tremendously important consideration and increasingly hard to find, particularly in more volatile markets like Toronto and Vancouver. That’s why we also take into account the relative value of each neighbourhood and how pricing compares with surrounding neighbourhoods and the overall region.
- Momentum. Whether you’re looking for your first home, your next family home or for an income property, it’s important to think about how homes in the neighbourhood you pick are likely to appreciate over time compared to competing communities. This momentum helps us identify neighbourhoods that have the likelihood of strong future appreciation, particularly given that houses in neighbourhoods with consistent, strong, upward appreciation tend to hold their value even during the downturns.
- Expert insight. To ensure we’re identifying desirable neighbourhoods, we consulted an extensive panel of real estate agents. In our survey, we asked them to assign a grade to each neighbourhood.
The result is a ranking of the best Canadian neighbourhoods in which to buy a single-family home, right now. Whether you want the convenience of downtown living, the larger footprint of the suburbs or the peace and quiet of the countryside, our rankings will help get you the best bang for your buck.
To identify the top neighbourhoods, we start by looking at value, using average housing prices provided by local real estate boards, along with expert insight from Zolo, Canada’s largest independent brokerage and an online marketplace where more than nine million Canadians go every month for their home shopping, selling and information needs.
To be clear, when we say value, we aren’t simply looking for the cheapest areas, as low prices alone could be indicative of neighbourhoods mired in social problems, or communities that lack amenities and offer little in the way of a return on your investment.
Instead, we’re looking for relative value—when a neighbourhood is more affordable than other areas nearby. We measure this by comparing the average home prices in each neighbourhood to prices in the surrounding area, the metro district (where applicable) and the greater municipality.