Why the smart money is buying single-family homes

Robert McLister: Shortage of houses and surging population is setting up a big opportunity, for those with the financial means

There’s little argument among experts that single-family houses should appreciate faster than multi-family homes.

“Location, location, location” is what real estate agents preach like a broken record, and for good reason.

But there’s a new chant in town: “home type, home type, home type.” It doesn’t exactly roll off the tongue, but it’s about to sway home appreciation more than usual for the next few years.

Whether you think Canadian home prices will rocket like an artificial intelligence stock, crash like a meteor, or something in between, there’s little argument among experts that single-family houses should appreciate faster than multi-family homes.

Housing analyst Ben Rabidoux at Edge Realty Analytics notes that for every single-family home we’ve started building in the past year, Canada has added 20 people to the population. That’s just about as lopsided of a supply-demand relationship as you’ll see in real estate.

“Single-family housing starts don’t look set to improve any time soon,” Rabidoux says.

“Building permits are leading indicators for housing starts, and it’s notable that they remain at 40-year lows nationally.”

Sure, the spectre of housing risk looms large, with mortgage rates almost double their 10-year average. Yet, for qualified prospective home buyers, it may pay to look beyond the short-term gloom.

It’s no coincidence that most economists and real estate analysts are now projecting higher house prices in the next year despite record unaffordability. The deficit of single-family residences combined with rising incomes should lead to detached home price outperformance as rates ease.

SOURCE: Why the smart money is buying single-family homes