How to Buy and Sell Real Estate in Canada outside of the major Metropolitan areas
by John Lovelace
A series of articles designed to assist anyone considering a purchase of
investment, retirement or business opportunities in Rural ,wilderness, or
small towns of Canada.
Part 1 of 6 "The Times they are a changin"
Rural and smaller Canadian cities are undergoing sweeping demographic, economic, and environmental changes. Understanding these changes will give
you the edge in the marketplace.
For the past ten years as I have traveled the length and breadth of this
country I have seen four distinct rural Canadas emerge. Each has its own
set of social economic conditions although they all share major
differences with the larger urban centers of Canada. Each has its own
parameters which will effect the cost of the initial purchase, the growth
potential of the purchase as an investment, and its use or enjoyment of the
property in the years you own it.
- Category #4
Chronically poor communities that have been devastated and then
abandoned by resource extraction. They range from towns in decline like
Leaf Rapids, Manitoba to virtual ghost towns like Uranium City, Saskatchewan on the northern shores of Lake Athabasca. These towns unquestionably offer
the lowest priced real estate in Canada. In some instances you can buy up
the whole town for a bargain like the recent sale of Kitsault in northern
BC. Usually the chronically poor community is characterized by its location
off the transportation grid. Ocean Falls, on the BC coast, and Uranium city in
northern Saskatchewan have no road access at all. John Lovelace Corporation
will be developing a catalogue of 100 Category # 1 properties of hot real
estate buys in Canada. But buyer beware, these are the penny stocks of the
Canadian Real estate business.
- Category #3
Declining resource-dependent areas,
that can no longer rely on
fishing,timber,mining,or related manufacturing industries to support a solid
middle class . Not nearly as devastated as the Category # 1 communities they
are usually still on the public road transportation grid. There are
literally hundreds of these communities in virtually every area of Canada as
the country's resources become depleted and people move back to larger urban
areas. Port McNeil on northern Vancouver Island is a Category # 2 region and
I purchased a two acre hobby farm there two years ago. They are less risky
than Category # 1 investments but lack the curb appeal of properties in the
gated community in the Okanogan valley. But they are solid investments and
there are certain key factors to consider now which will affect real estate
values later.
- Category #2
Amenity-rich areas
that are close to urban ares are fueled as Baby
Boomers retire, as more people buy vacation homes and as new generation of
Internet savvy professionals choose to settle in small towns. The
communities in Quebec's quiet Eastern Townships are quintessential Category
# 1 Communities. They can be blue chip investments but are not high growth
potentials because of the high capital cost and tax base of the initial
investment.
Category #1
The pristine waterfront or wilderness retreat. This is that perfect
property that everyone dreams of owning someday. It's secluded by a quiet
lake with a breathtaking view where three days will recharge your soul. Or
it can be a 200 acre ranch in the foothills of the coastal mountains in
British Columbia. They can be very hard to find and are at the top of the
food chain. The value of these properties are completely immune to economic
factors affecting the other categories.
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Demographic transitions
Migration into and out of rural communities is the key to understanding the
demographic characteristics of rural Canada. It effects everything from the
vitality of the community and its culture right down to the availability of
a tradesman to fix a leaky faucet. However, the long-standing exodus from
rural to urban has shifted in many areas, and net migration is now fueling
growth in many rural communities. Some areas where this has already happened
are obvious but the key in sound real estate investment is to determine
where this swing will occur in the future.
Over the months and years ahead
we will be identifying best bets where Baby Boomers will choose to settle
or retire in quieter, less-congested places. These new residents bring new
experience, skills, and financial resources to rural areas, but they can
also contribute to new pressures on the cost of living, especially real
estate values. The key is to buy before the tide turns.
Globalization and Rural investment
Declining resource-dependent areas like coastal Newfoundland which have
been hard hit for generations may now be a surprisingly real estate best
buy. My father grew up in one of these "yesterday's communities."
Greesnpond, Newfoundland could no longer sustain a blue-collar middle class
as far back as the middle of the last century. Today, new technologies, new business and manufacturing practices, and new global competitors have led to
profound changes in rural economies. In the case of the fishery it was the
advent of the factory fishing ships that netted, cleaned, froze and packaged
the products on the spot. With declining economies, more educated and middle
class families were leaving for opportunities elsewhere.
These communities were steadily losing population, especially young people,
although rural areas have always lost young people. However, globalization
will also have a surprising positive effect on the economic stability of
places like Greesnpond. Thomas L. Friedman, in his best seller The World Is
Flat: A Brief History of the Twenty-First Century, looks at current trends
in globalization with an emphasis on the early 21st century. The title is a
metaphor for viewing the world as flat or level in terms of commerce and
competition, a metaphor which will have significant effect on the real
estate values in non-urban areas like Greenspond . These effects and how
they translate into meaningful real estate buying decisions will discussed
in detail here later.
Next Week
- See how changes in rural economies affect real estate price cycles and learn how to enter the bell curve at the right place
- See how an economy based on tourism is both a curse and a blessing
And in the weeks ahead
- How to make a great living in the wilderness of the future
- How Global weather changes in rural Canada will effect real estate prices by region
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