It’s the end of summer, and time for a bit of forecasting before we get into the Fall market!
On September 7th, we were expecting to see an interest rate increase, but it didn’t happen. It probably should have happened, but such is life.
These cycles of hikes and pauses may continue until early-to-mid 2024, where we’re likely to see a bit of relief.
The “deflation” part sucks, but the minute rates have stabilized or decreased… there’s going to be a flood of activity and our market will be back to being “red hot”.
There just isn’t enough supply to meet the demand. This is a generational issue, and it’s not going to get better for many, many years.
Right now, Buyers haven’t stopped their dream to buy a home.
They’re just biding time and waiting for the right signs.
This is our best visual for the real estate market right now.
For the rest of 2023, the market will be taking a bit of a mid-afternoon break in the sun… still active, but a lot quieter than we’re used to seeing.
But it still has those teeth and those claws, ready to attack when the time is right.
Since our area (Milton and the Greater Toronto Area) is already getting close to being “unaffordable” for most families, we expect the next wave of activity after interest rates have stabilized or decreased to be VERY good for cities further out.
Our local market will remain strong, but we won’t see the same average % increases as the smaller, more affordable areas.
Think Kingston, London — and secondary Canadian market cities like Edmonton, Regina and Moncton.
These cities have lower average prices, so there’s just more headroom for growth.
Our prediction is that many people are going to look back to the second half of 2022 and 2023 and think, “WHY didn’t I buy something??”
Regardless of what is likely to happen in the future, let’s talk about today and the rest of the year. Where are the best opportunities?
We see this market in late 2023 and early 2024 being good for three very specific groups of people:
1. First-time Buyers
Remember that the price you pay lasts forever. Interest rates being higher are temporary. Weather the payments for a 1-3 year period, and then arrange a new mortgage at a lower rate.
Even a year ago, the townhouse you can buy today for $950,000 was selling for $1.2 million. It will absolutely go back up to that number when rates are lower.
2. Investors
Same reasons as #1 for investors. If you can find something that cash flows now, it will REALLY start looking good in a few years.
SIDE NOTE: I’m going to call out the mortgage reps over the last few years that told their investors to use long-term variable-rate mortgages on their investment properties… when rates were HISTORICALLY LOW. Please do your job better next time.
To us and a lot of other investors, Ontario might as well be dead right now.
The rules are too heavily in favour of Tenants, and the lease rates compared to purchase prices are way off.
But the good news is there are MANY other great places to own real estate!
The next Investor Class is likely coming up soon… if you’d like to join us.
3. Move-up Buyers
We recorded this video about how it makes the MOST sense to move to a larger, more expensive home when the market is at a low point.
So if you, or someone you know, is running out of space… the next six months or so will be an important window of opportunity. Read this guide if you want to know more about our Happy Home Method.
The big bonus of this strategy right now is that you might be able to “port” your lower rate mortgage to the next property, which would save you a lot of money.
If you fit into one of these groups… but you’re just not sure where to start… reach out to us and we’ll help you figure out if now is the right time, or if it’s better to wait.
One last thing to consider:
When you buy a home, you keep that purchase price FOREVER.
But you keep your interest rate only for the length of your term, which is generally 1-5 years.
When it’s time to renew your mortgage, you’ll likely be looking at lower rates in the future… but the mortgage balance is ALWAYS going to be based on the price you paid.
A lower price with a higher interest rate is far superior to a higher price with a lower rate.
Plus, the lower price also requires less downpayment, which is an added bonus.
From what we can see… all signs are pointing to now being the time.
