USA loses AAA credit rating

Following a week of market losses Standard and Poor’s downgraded the United States credit rating from AAA to AA+ on Friday.  Volatility has been constant since the market fall of 2008 and is certain to continue as the markets officially react to the news.

Investors of all sizes are diversifying their portfolios to include heavy weightings of real estate which have proven to be low volatility.   Real estate is priced based on pure demand and supply pressures.  In Toronto the demand will continue to increase as the population grows.  With limited development of high speed rail corridors to the suburbs there is only so much sprawl that can be supported limiting supply which pushes the price of existing stock higher.

With hardly any new apartments being built small investors are becoming landlords by purchasing one or a few condos and renting them out to pay the mortgage.  With long term investing in mind this type of investment can create excellent cash flow and quickly build equity for investors.  Renters benefit from modern buildings with excellent amenities.

Supply is almost completely static in terms of single family houses in the city.  We’ve recently seen surges in the price of houses in neighbourhoods close to downtown such as the south east end of the city (South Riverdale, Danforth, etc). With interest rates at historical lows homes which may have been previously be considered undesirable have been renovated or are purchased with renovations in mind.

If you’re considering diversifying your investment portfolio to include real estate contact Spring Realty today.


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