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    This Month’s Edition

    February, 2023

    What to expect in 2023?

    What can we expect going forward in 2023?

    I would like to share with you a video that CIBC recently released with Benjamin Tal.

    Mr. Tal is a top economist with CIBC and is an expert on topics such as labour market dynamics, real estate, credit markets, and international trade. He has consistently been right on many predictions that he has made over the past several years. To learn more about Benjamin click on his bio here.

    The 51 minute video covers the following topics:

    Interest rates & inflation





    Here are a few of the highlighted key points. If you do not have time to watch the entire video, here are my takeaways.

    Softening demand will see inflation ease to about 4%. The Bank of Canada wants to return to target inflation of 2-3% which will take a few years and will result in a mild recession with some job losses.

    The rate of inflation will slow. Prices for goods and services are not necessarily going to drop, but they will go up more slowly.

    We are not the same as the USA. We have more consumer debt. US rates may go still higher, but Canada’s rates may not.

    On January 25 we saw an interest rate increase of .25%. This is a smaller rate increase than many of the hikes that we saw last year. The Bank of Canada stated in its press release that it is putting further rate increases on hold while it assesses the effects of last year’s tightening.

    Inflation drivers are Supply, Demand and Unknown Influences such as COVID, China’s zero COVID policy and the war in Ukraine, which couldn’t have been predicted.

    The supply chain is improving as oil prices decline, reducing shipping costs. The US has 20% more truck drivers post-pandemic than previously keeping goods moving more reliably.

    Demand is decreasing in Canada. More people are focusing on the basics: shelter, groceries, and other necessities. Less on fluff and stuff and more on needs.  

    The war in Ukraine has affected world food prices, and they will likely continue to increase, but not as quickly as before.

    The Covid pandemic created a unique situation. We got one benefit that a recession usually creates – low interest rates, without the cost that a recession usually inflicts – major job losses. Real estate “borrowed” activity from the future with an abnormally high number of transactions. The current lack of activity in the market is a result of the high activity in the past.  This is a “reallocation of activity over time. Not a crash.”  

    Currently, listings are down significantly. This is keeping prices from tumbling dramatically. Increased immigration will continue to put upward pressure on home prices and rents. 

    Some condo projects are on hold or canceled in Toronto due to high-interest rates, high labour costs and high supply costs. This will significantly impact supply and prices in the future as fewer projects will reach completion years from now.

    We are getting more jobs, and fewer buildings and people are on the sidelines saving. In addition, we will see record increases in immigration or continued immigration which will keep things moving as demand will remain high and supply remains low.

    Tal believes we won’t see any more changes to the overnight rate until 2024. Currently, 3-5 year fixed rates are coming down from previous highs despite the recent increase to the overnight rate. So he thinks this could be it for increases in 2023.

    My take is a brief summary.

    We need more homes built. We have many Canadians who are working and are looking to purchase. They are waiting on the sidelines for rates to come down. As fixed rates continue to decrease and people’s mindset adjusts to a new normal of 4-5% mortgages, we will see more listings on the market. Activity will increase. 

    Notwithstanding, everything is expensive these days, and people are stretched. The media is still negative and will likely continue with their doom and gloom narrative.

    I hope you found this information helpful, and that it will add value to you as we navigate 2023 together. 

    Thank you for sticking with me through this entire email. If you wish to watch the full video the link can be found here.  Let me know what you think. Do you think Benjamin Tal is onto something here? 

    Have a great February!

    Plans to Make before Closing Day

    closing day real estate

    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?

    fixer upper real estate

    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

    data collection and privacy

    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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    Real Estate Newsletter
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    Real Estate Newsletter
    Real estate newsletter provided by Randy Selzer, real estate agent serving Mississauga, Oakville, and the Greater Toronto Area, provides insights into the real estate market. house and condo prices, financial trends.
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    Randy Selzer - Real Estate Agent
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