Trying to Make Sense…

The level of uncertainty and confusion amidst consumers and within the realtor community has been exacerbated by the incessant filter of negativity used by the media to fuel even more uncertainty. Truly a vicious cycle. It’s no wonder buyers and sellers are sitting “on the fence”. Who can possibly go forth with confidence?

How refreshed I feel to have had the recent pleasure of listening to Shaun Cathcart, Chief Economist of the Canadian Real Estate Association (CREA) discuss his analysis of the current state of the market as it relates to not as much the short term but the longer term of where we might be headed. While not a quick fix it’s a positive message. I feel more grounded now in how I can help my clients make the best decisions for themselves and their families.

INTEREST RATES & INFLATION The Bank of Canada controls the trigger when it comes to interest rates and their main job these days has been to lower inflation. We’ve seen a number of rate increases but over the last 3 months, inflation has indeed slowed down. With a .50 basis point increase this past week and likely a nominal increase again in December, it appears that the dust will settle and prices will begin to stabilize next year. By then we’ll all be able to breathe again with the knowledge that interest rates won’t soar to 17% like they did in the late 70’s. For one thing we have record low unemployment rates which is very different from back then.

For sure it will be challenging for those of us who have upcoming mortgage renewals or who are on variable rate mortgages right now. There are options for you. One would be to lock in to fixed rate for a shorter term and then refinance when the rates are lower again. Another suggestion would be to pay more towards the principal portion of your mortgage if possible. Want some answers? Reach out to me and I’ll be sure you’re well looked after.

STRESS TEST & MORTGAGE QUALIFICATION When the stress test (an interest rate target specifically used to qualify prospective buyers to ensure they can afford higher rates) was at 5.25%, both variable and fixed rates were much lower but now the stress test is 2% higher than the actual rates bringing it upwards of 7.25% which renders it almost impossible to qualify for a mortgage even for buyers who can afford to buy and who want to buy. For example, there are well educated, well employed people out there with decent down payments who aren’t qualifying for a $2500/month mortgage even though they’re comfortably paying $3500/month in rent. How does this make sense? Your guess is as good as mine. Solution: the powers that be need to do something about the stress test!

IMMIGRATION & POPULATION LEVELS Consider this. Immigration levels were 200,000 in 2021. Thus far in 2022, that number is 700,000. That’s 500,000 more people than last year. The fact is that immigration levels will continue to rise each year. Right now the population of Canada is 39 million people which is almost double the population in 1971 which at the time was 22 million. The general age of home ownership is between 30-85 and is currently comprised of the Baby Boomers, Gen X’ers and Millennials. Each year, there are more than 500,000 people who will turn 30 years old. This is a far greater number than those who turned 30 in 1971. They are all going to want to do the same things we wanted to do. Do you see where I’m going?

LACK OF INVENTORY & THE NEED TO BUILD Even though we’ve heard for years that Boomers will be selling their homes, many are in fact holding on to them. So in essence there are way fewer homes like those which our parents purchased now than there were then. Last year 60% of newly built “units” were condos and most of those condos were around 500 SF. Let’s face it, small condos aren’t suitable for young people who want to start a family and there’s way less space to build large single family homes in the suburbs and exurbs than in the past. This brings up the dilemma of the “missing middle” – semi detached homes, townhomes and small multi unit buildings. Currently 70% of Toronto is zoned for detached homes only and they’re already built! We’re finally seeing some movement in the quest to end exclusionary zoning. There’s no reason why tasteful low rise buildings can’t be built in traditionally single family neighbourhoods. Light at the end of the tunnel!

DEMAND & THE FUNDAMENTALS It’d be hard not to see that demand is strong. People may be in a “wait and see” mode right now but the time will come when things will stabilize and the uncertainty will lessen. We’ll get used to the new rates just like we got used to the GST when it was introduced, just like we got used to the Municipal Land Transfer Tax when it was introduced. I may not agree with either but I accept both as part of the “cost of doing business”. Don’t forget that we live in the most vibrant and dynamic city in the country, the economic and cultural engine of Canada! Employment levels are strong as is the economy. If you crave an opportunity, then get into the real estate market. There are some incredible offerings right now.

Thank you for taking the time to read my newsletter. If you like it, please pass it along. Feel like discussing your particular situation? Call me! I’m here to help.

Sources: Treb Market Watch, CREA, Stats Canada, CMHC

Kimmé Myles

Matching her knowledge of Toronto’s eclectic mix of central core neighbourhoods and impassioned by her diverse mix of buyers and sellers, Kimmé is naturally motivated to create a positive and professional experience. Kimmé does her homework and knows her inventory. She is genuine, honest and a straight shooter. Nor is she afraid to think “outside the box” as she employs creative strategies to make dreams become reality.

Born and raised in Toronto and coming from a successful fashion background in design and management, Kimmé could not have met a better match for her entrepreneurial skills than by working in Real Estate. Inspired by her father, well known Toronto clothier to the stars, “Lou Myles”, she learned from a very young age to work hard and strive for excellence.

Licensed since 2005 as a full time Sales Representative and a Broker since 2016, she continues to be proud to be affiliated with the Toronto office of Sotheby’s International Realty Canada and to be part of the highly respected world renowned global luxury brokerage, Sotheby’s International Realty.

Kimmé has received numerous sales awards throughout her career including the prestigious Gairdner, Diamond and President’s Awards. She has completed extensive negotiation training and is among a select group of realtors in Canada to hold the Master Certified Negotiation Expert (MCNE) Designation and the Certified Negotiation Expert (CNE) Designation. In addition, she is a member of the prestigious U.S. based Institute of Luxury Home Marketing and also carries the Luxe – Luxury Listing Specialist Designation. She holds the SRS Designation – Seller Representation Specialist and the SRES Designation –Senior Real Estate Specialist – both accredited programs through NAR – The National Association of Realtors, USA.

Entrusted with the life choices of her clients, Kimmé is truly honoured to have the opportunity to serve and assist others and does so with integrity, commitment and enthusiasm.

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