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This Month’s Edition
Real Estate Outlook
We are in the “dog days” of summer, and the real estate market has slowed. Part of this is normal. August is usually a slower month, as most people who were planning to move have already done so. Especially if they have children who will be going back to school in a few weeks.
The usual trend is to buy or sell in the spring, so that everyone is moved in and settled before the school year starts.
The Toronto Regional Real Estate Board (TRREB) published their July 2023 stats a couple of weeks ago. Here’s some excerpts from their press release:
- new listings and home prices were up in July 2023 compared to July 2022
- the number of sales were up 7.8% compared to July 2022.
- new listings were up by 11.5% compared to July 2022
- average sale prices were up 4.2%
The one thing that the press release didn’t mention is that July 2022 was one of the worst months for real estate activity. Interest rates started rising in March of 2022, and by July, the market was in retreat. So while any increase in sales or prices is appreciated, using July 2022 as a benchmark is setting the bar pretty low.
There were a couple of quotes included in the press release that are both true.
“Uncertainty surrounding the direction of borrowing costs, jobs and the overall economy has impacted home sales over the last two months. Over the long term, the demand for ownership housing will remain strong on the back of record population growth. However, many homebuyers will continue to be on the sidelines in the short term until the direction of monetary policy and the economy becomes clearer,” said TRREB Chief Market Analyst Jason Mercer.
“We continue to suffer from a misalignment in public policy as it relates to housing. The federal government is targeting record levels of immigration for the foreseeable future, but we have seen very little tangible progress in creating more ownership and rental housing to accommodate this growth. Population growth is imperative for economic development; however, this growth will be unsustainable if people can’t find an affordable place to live. All three levels of government need to be on the same page to fix this problem,” said TRREB CEO John DiMichele.
Interest Rate Follies
Higher rates have definitely impacted the market in a major way. With prices so high in the GTA, even a small uptick in rates can have a major impact on affordability. So far we have had 10 rate increases in 17 months.
For homeowners with existing mortgage loans, those with variable rates have been hit the hardest. There have been reports in the local papers and elsewhere, of people whose payments have doubled or even tripled. It’s a problem for many, although quietly and behind the scenes, the banks have been helping existing homeowners by extending their loan amortizations out to extreme lengths – 40 and 50 year amortizations, and even longer in some cases, to keep the payments manageable.
Immigration continues to be a problem. I have said many times here and on my podcast, that I am very much pro-immigration. Canada is a big country and there is plenty of room for everyone.
But the process has to be managed. Someone in Ottawa forgot to check if there were enough places for all these immigrants to live in, either to purchase or to rent.
They opened the floodgates without considering where poeple were going to live.
The reckless numbers we saw in 2022 and are seeing now again in 2023 will only make the problem worse. The saddest part is that it’s the new immigrants to Canada who are being exploited. I don’t think most of them had any idea of how outrageous housing prices are here, and now they have to deal with it.
Looking forward, the Bank of Canada will hold their next meeting on September 6, 2023. I don’t think there will be any more interest rate increases this year. Fingers crossed.
If rates do start to come down, it will be sometime in 2024, probably around midyear.
Summer is almost over. Make sure you get out and enjoy the next couple of weeks!
P.S. make sure to check out and follow my YouTube channel, and my podcast!
Plans to Make before Closing Day
When you sell your property and buy your next dream home, closing day can come faster than you might imagine. Before you know it, it’s just weeks away! So it’s important to make the proper plans to ensure everything goes smoothly.
Here are the most common plans you’ll need to make:
- Contact the post office to get your mail forwarded. No matter how thorough you are in updating your address with companies you deal with regularly, you’re bound to miss a few. Using the mail forwarding service will ensure you get that mail.
- Double-check that your home insurance will be transferred on closing day, so your new home is covered from day one. Also, don’t forget to update vehicle and personal insurance (medical, life, etc.)
- Make arrangements with utility companies – phone, electricity, heating, etc. – as soon as possible. Remember, you might be closing some accounts and opening new ones. That can take time.
- If you are upgrading your internet at the new home, a visit from a technician might be required. Make that appointment now.
There may be more arrangements to make before closing day. Create a checklist to make getting it all done easier and less stressful!
Should You Buy a Home that Needs Work?
Imagine you find a home on the market that checks all the boxes. There’s only one issue. It needs work. Perhaps the paint has faded, or the kitchen is old, or there are repairs needed.
Should you make an offer on that home? That depends on many factors, of course.
The first thing you should consider is whether or not the home is otherwise ideal. If it has everything you want — location, size, style, number of bedrooms, etc. — then you may only be a few improvements away from a real gem.
You should also consider how much those improvements are likely to cost. Cosmetic projects — such as painting, replacing light fixtures, etc. — tend to be more affordable. In many cases, those projects are also DIY-friendly. However, major improvements, such as upgrading the kitchen with new countertops, sink, and cabinetry, can be expensive.
Fortunately, homes that need work don’t show as well as pristine listings. So, the cost of doing the improvements you need might be offset by getting the home at a lower price.
The bottom line is, buying a home that needs work is definitely worth considering.
Data Collection & Privacy Protection
Warnings about online security breaches leading to identity theft are often based on worst-case scenarios of scams or viruses, but it’s important to be aware that commonplace online activity can also contribute to the erosion of privacy.
Most people’s social media conversations, browser histories and search-engine activities are constantly contributing to virtual profiles that identify them as prime recipients of automated communications, usually in the form of targeted advertising and news feeds.
For example, if you show particular interest in specific subjects, products or services, you are certain to be exposed to more of the same, curated through an algorithmic analysis of your usage. Fortunately, you can defend against being a target of constant “click-bait” by deleting your internet history on a frequent basis. You can also regularly remove or block website “cookies” that your computer automatically collects and saves to create shortcuts for faster connections when you revisit sites. These “cookies” also collect data about you that is used by online advertisers and curators of content. Furthermore, you can download an advertising blocker that interrupts ads targeted at you.
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