The real reason there are less real estate investors today

This week, I came across a fascinating article on a significant shift in investment trends.

The article discussed the results of a survey which showed a decline in the popularity of real estate investing among 1,013 U.S. adults, falling from 45% in 2022 to 34% in 2023. It’s worth noting that similar figures are likely to be seen in Canada.

Real estate has historically held appeal for many investors, but its popularity can and will plummet when aligned with a cycle of rising interest rates.

Unpacking the Underlying Issue

Post-Covid-19 events that unfolded globally (including government stimulus packages, global lockdowns, and supply chain issues) triggered intense inflationary pressures. Central Banks, like the US Federal Reserve, responded with rapid short-term interest rate hikes to curb inflation.


For instance, the US FED Funds rate saw ten consecutive increases from March 2022, skyrocketing from 0.25% to 5.25% – a 2,000% increase over 14 months.

Given the size of the US economy, which represents 24% of the global economy (note 1), other central banks had to follow suit.  The Bank of Canada, fearing capital flight and potential currency devaluation, mirrored the US FED’s strategy, pushing its policy rate from 0.25% to 4.25% – a staggering 1,700% increase in the same period.

These unprecedented short-term interest rate hikes significantly impacted bond markets and, by extension, mortgage interest rates for borrowers, affecting the viability of real estate investing significantly.

Consider an investor owning a building with a net operating income of $100,000. In February 2022, the property could support a refinance mortgage of $1,646,450. (Amortization 35 years, mortgage rate of 3.10%). Now, due to these changes, the property can only sustain a mortgage of $1,334,280 (mortgage rate increased to 4.66%) — a nearly 20% drop.  This drastic decrease in refinancing capabilities significantly dampens the enthusiasm of real estate investors, explaining the dwindling popularity of this investment avenue, particularly in robust asset classes like multifamily properties, the situation is compounded. Sellers in these sectors are typically disinclined to part with their assets unless they are offered a satisfactory selling price.

Unearthing Additional Issues

Undeniably, there are other factors at play contributing to the current real estate climate. Certain real estate sectors, like office properties, have experienced a surge in vacancy rates over the past few years. The rise of remote work culture among many companies has dramatically altered the landscape of office demand, subsequently affecting investors’ borrowing power. Similarly, the retail real estate sector has long been grappling with its own challenges.

The escalating competition from online shopping, amplified by the impact of the recent Covid-19 lockdowns, has forced many smaller retail stores to shutter or drastically cut down their sales volume.

The Path Forward

Despite these hurdles, the solution for real estate investors remains straightforward. Real estate continues to be a powerful tool for wealth creation and inflation hedge.

Its unique appeal: banks can lend against it, providing investors with the leverage needed to grow their portfolios.


In our inflationary environment that has started climbng since 2021, it’s more important than ever for property owners to enhance their property’s financial health. Property owners must treat each property as an individual business entity. Just as public companies strive to generate returns for their shareholders, so should real estate owners view their properties. By providing superior services and amenities to tenants, property owners can improve their property’s financials. Each incremental increase in net operating income directly elevates the property’s value.

Thus, regardless of interest rates or wider economic conditions, a proactive property owner can still thrive.

Note 1 source:

Mikael Kurkdjian, the broker of record (AEO in Quebec) with Baron Realty and licensed real estate broker in the Quebec and Ontario markets in Canada. Mikael is also a multifamily real estate investor himself.


Apartment buildings: Serious buyers only

The market supply for available apartment buildings is at an all-time low. Or, should I say, sellable apartment buildings are.

We all know that the value of apartment buildings has dramatically changed since the rates have risen from the low two per cent range to the high four per cent range.

However, many potential sellers are still clinging to the idea that they can sell at 2021 prices, which is no longer realistic.

As a result, there has been a dramatic increase in the number of expired listings, which is damaging to both sellers and brokers.

Sellers must face new economic reality

For the seller, unrealistic price expectations deter serious buyers from putting forward reasonable offers. For the broker, an expired listing means no pay and reputation challenges.

Taking a listing at “any price” is not beneficial to either party. And apartment buildings – the safest real estate investment – should never remain unsold or expire at this rate!

As the market begins to respond to more stable interest rates, serious sellers are still present and there are many serious buyers looking to invest their cash.

However, the down payment in proportion to the loan has to make sense for both parties.

If you are a seller who has accepted the fact that your 2021 valuation is no longer accurate, there are buyers out there.

Buyers: Offer your “best price”

Similarly, if you are a buyer who is willing to buy at reasonable numbers, your seriousness toward the purchase price you put forward is more important than ever.

Private sellers take time to adjust to the fact that their building is worth less today than it was two years ago. Therefore, it is crucial not to put a deal under contract and start renegotiating.

Today’s sellers are less patient than before (since they feel they are taking a “discount” to begin with), and buyers should come in with their best price and close the deal without delay.

Remember, a seller who has come to terms with the current valuation of their building will not have patience for buyers “nibbling” at the purchase price for minor defects, like they may have in the past when the margins were much higher.

If you are a serious buyer in today’s market, we recommend taking a more proactive approach with brokers who are currently transacting, i.e. put yourself forward as willing and able to drop an offer quickly.

Even months or years after having a building expire, a seller may be weary of doing a proper listing process again, as that experience caused the seller time and effort and has surely incurred them emotional dissatisfaction.

Such sellers, either based on their personal experience, or by just observing the market, are much more likely to entertain a one-off deal from a buyer that has the proper reputation (or for whom the broker can, more-or-less, vouch based on previous transactional experience).

In general, if you are a serious buyer, do not underestimate the psychological impact the doubling of interest rates has had on the majority of owners/sellers of apartment buildings and tailor your approach accordingly.

Baron Realty specializes in matching buyers and sellers of apartment buildings. The author,

Ramona Ursu works in partnership with Mikael Kurkdjian and a team of real estate professionals to bring the best boutique-brokerage services to the apartment transactional space in Ontario and Quebec.


The 6 Steps Before Making an Offer in Real Estate Investing


At Baron Realty, we deal with a diverse clientele of buyers in the apartment building market. To help them be more efficient in their investment decisions, we’ve developed a step-by-step process for deciding whether to make an offer on a particular property. In this blog post, we will share six essential steps to consider before making an offer on a property.

The 6 steps before the offer process begins

  1. Assess the Pricing First, determine if the asking price is reasonable based on comparable properties in the area. If the price is significantly higher than the market value, it may be best to move on to another property. This can be a quick 2 minute analysis to advance or not.
  2. Evaluate the Location Consider whether the property’s location fits your investment criteria. For instance, if you prefer properties close to public transportation or within a certain driving distance from your home, make sure the location meets these requirements before moving forward. There is not point to make an offer on a property if the location was not satisfactory.
  3. Understand the Demographics Consider the target clientele for the property, as different locations cater to different renters. Investors should know their preferred market, whether it’s students, downtown dwellers, or suburban families, and ensure the property aligns with their investment strategy. Different clientele needs different types and sizes of units and this must be assessed at this step 3.
  4. Inspect from the exterior the Property Condition Before making an offer, assess the property’s condition in relation to its asking price. If a property requires significant repairs or maintenance, the price should reflect those costs. Avoid making an offer that will require renegotiating after discovering obvious maintenance issues during the property inspection stage.
  5. Determine the Rent Upside vs. Cap Rate Compare the property’s current rent levels with the potential for rent increases. Properties with more upside in rents may justify a lower cap rate, while those with little to no rent growth potential should command a higher cap rate.
  6. Conduct a Financial Analysis Lastly, analyze the property’s financials. This step should be taken after passing the previous criteria, as there’s no point in investing time in analyzing numbers if the property doesn’t meet your other requirements. The financial analysis will help you determine the final offer price and at this step is where the offer negotiations can begin.


Real estate investing is a long game, and our years of experience in multi-family and commercial real estate brokerage have taught us the importance of a systematic approach. Following these six steps will help you make more efficient and informed decisions when it comes to making an offer on a property or waiting for a better opportunity.

Baron Realty specializes in matching buyers and sellers of apartment buildings. The author,

Mikael Kurkdjian works in partnership with Ramona Ursu and a team of real estate professionals to bring the best boutique-brokerage services to the apartment transactional space in Ontario and Quebec.

Youtube video of this article is at

(53) The 6 steps BEFORE making your offer – 2023 edition – YouTube


Baron Realty / Immobilier Baron
400 – 6500 Transcanadienne
Pointe-Claire, Québec H9R 0A5
Telephone: 514 932 9000


Baron Realty, Brokerage
303-225 Duncan Mill Road
Toronto, Ontario M3B 3K9
Telephone: 416 301 3931


Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam 


Get latest news & update