Trust Playing a Major Role in Real Estate Investing in Canada

Investment in the real estate market continues to be a vital component of a healthy housing market in Canada – but what happens when trust in real estate investing begins to wane?

Our attention was drawn to a recent Globe and Mail article that points out that a widespread lack of trust in the financial services industry may be what is keeping Canadians from achieving their financial goals. According to Ms. Hamilton-Keen, director of private client management for Mawer Investment Management Ltd., a recent study, “Investor Trust Study,” done by the CFA Institute & Edelman, found that financial services sit at the bottom of industries most trusted among clients. Only 52% of investors stated they trust the financial services industry.

Apparently, the number one reason that investors said they are losing trust and confidence in the financial services sector was the lack of ethical culture within global financial firms.

Improving investor trust as it relates to ethics is something that the financial community as a whole has to look at. The only solution for this is ongoing dialogue – dialogue in training, amongst colleagues, and in the industry as a whole. We now know that there is such a thing as “to big to fail” and ethics can mean the difference between a recession and a healthy market. Once something as monumental as this occurs that calls ethics into question it can be a very long road back, as we can clearly see in the afore mentioned study.

How about the mounting issue of trust in the economy? In the last BOC rate announcement, economists from across the board, including the big banks, are calling for further Bank of Canada interest rate cuts, some even going as far to say that Canada is in/headed for a recession.

In the Toronto Star – top TD Canada Trust economist Randall Bartlett stated “It is likely the economy was in recession in the first half of the year, thanks to the damage from a collapse in oil and commodity prices that has persisted since 2014.” http://www.thestar.com/business/economy/2015/07/06/canada-in-recession-rate-cut-likely-td.html

Other bank economists have come out calling for the Bank of Canada to cut its rate another quarter point, this leading up to the July 15^th Bank of Canada rate announcement that passed this past month. In a recent article posted on BNN, “Doug Porter of Bank of Montreal and Mark Chandler of Royal Bank of Canada joined a growing list of economists calling for Canada’s central bank to cut interest rates next week on signs of a faltering recovery,” wrote Greg Quinn and Erik Hertzberg, Bloomberg. http://www.bnn.ca/News/2015/7/8/Bank-of-Montreal-and-RBC-join-Bank-of-Canada-rate-cut-call.aspx

Ask and you shall receive? Well, the BOC did cut Canada’s interest rate another .5% this past July.

If trust in the Canadian housing and financial markets is unpredictable, this will make it hard to have trust and confidence to invest. Trust is everything when it comes to the financial markets! The best that we can do to stay on top of how trust is impacting investors and make predictions is to have access to the data needed to look at short and long term trends.

When looking at the housing market in Canada – aside from looking at factors that impact the interest rate, also pay attention to housing trends and sales, if the economists at all of the major banks look at house indices like the Teranet – National Bank House Price Index™ when making predictions, you should too.

Get the up-to-date data and information when you needed, and stay informed. Visit Purview For Lenders at lenders.purview.ca today.