We have now seen the impact that high interest rates have had on the housing market. While the number of transactions is down, affordability continues to be a problem. There isn’t a one-way solution or policy that can significantly improve the entire housing market. With that being said, there are a few things to consider in the current real estate market that can help you better understand what’s going on. 

More Construction

If you are in Ontario, Canada for example, the government’s goal is to build 1.5 million homes in the next decade. To help achieve this number, there are proposed changes to zoning laws that exclude certain single-family neighbourhoods thus allowing them to turn their homes into multi family housing. There could also be reduction in levy costs that are charged to the builders. Reducing building costs means more houses faster.

Foreign Buyer’s Ban

Canada has implemented a 2-year ban on non–resident home buyers as of January 1^st, 2023.  Although the ban has exemptions and does not apply to every type of property, the ban was brought in with the intention to house Canadians first. Refugees claimants, non-Canadians with a work permit and international students are some of the groups that are exempt from this group. Believe it or not, foreign owners make up a small percentage of home ownership across Canada. So the impact will be minimal.

Anti-Flipping

Home owners selling a home that they have owned for less than 12 months will be charged a sales tax. Profits from flipping properties will now be fully taxed as business income as though the seller had earned the income from another employment. The sale of a primary residence falls under the Principal Residence Exemption. However, there is a criteria that must be met to qualify, such as actually living in the home for a specific period of time. Investment properties will also be subject to this full tax instead of capital gains if sold under the 12-month period. The theory here is that flipping houses keeps homes vacant for longer periods of time and fuels increasing house prices. As with any rule, there are exemptions to this tax such as death, disability and divorce to name a few.

Vacant Home Tax

Any home owner with a vacant home will now have to pay a vacant home tax. In a housing crisis with low supply, this tax was built to motivate investors to either rent or sell their home. Therefore creating more housing options. There is a form that every home owner must fill out declaring if their home is vacant or occupied. The vacant tax amount is 1% of the home’s assessed value. The intention here is to maintain a health real estate market.

With a lot of uncertainty in today’s real estate market, many buyers are waiting on the sidelines wondering if right now is the best time to get into the market. Prices are dropping but with interest rates continuing to rise, it’s not so clear. Every situation is different so everyone’s timing will be different. However, below are 5 signs to watch for when buying real estate. 

Stability / Income

Anyone looking to get into the market has to make sure they have a stable income and good credit. The reality is that without BOTH of these, you will not get a mortgage. With your financials and down payment amount, you will be able to determine your budget and calculate your monthly payments. Now the next question that you need to ask yourself is if you can manage for the next three to five years.

Buyer’s Market

As a buyer you want to buy in a balanced or in a buyer’s market. Since the housing demand is low, buyers can now take their time looking without any competition. You have more negotiating power as well since there is less competition and more inventory to choose from. You can tell when it is a buyer’s market when houses are taking longer to sell at the listing price.

Interest

Ideally, you would also want to buy while interest rates are low. However, the caveat here is that lower interest rates usually result in higher home prices. It’s also important to keep in mind that interest rates change but mortgage amounts don’t. Yes, higher interest rates will increase your monthly payments but there is always the possibility that the rates will come down.

Timing The Market

Try to time the market and you are likely fail. The market can change so quickly and it is hard to predict. I repeat, the perfect time to buy a home is when you find a home that you can afford, and meets your needs. You can put yourself in a bad position by waiting and trying to predict the market.

Seasons

Buying during certain times of the year may be beneficial for buyers. December and January are the best time to look for a home. The cold keeps people away because nobody wants to move in the winter. Less demand means less price action. Spring time is when we see an increase in activity as buyers want to move into a home before summer.

At the end of the day, you should buy real estate when you have your finances in order and you can find a home that you are comfortable with. Think about your goals, and see if today’s market allows you to get there. Speak with professionals that can help you develop a plan that is best for you. There are opportunities in every market but your end goal is what will ultimately help you decide when you should buy or not buy. Have your finances in order and stay ready for when your opportunity comes up.

The rental market is experiencing a demand rarely seen before and the growing frustration within renters looking for a home is being felt. With bidding wars and rental listings not lasting more than a day, today’s renters need to be prepared and think creatively when submitting their lease offers. Below are 5 rental tips that can give you an advantage. 

Preparation

Having all of your documents in order will save you a lot of time. The last thing you want to do is spend a day gathering your job letters and references when listings are finding new tenants within hours of being posted.  Work with your agent and have your offers prepared so that all that you have to do is submit it. In real estate, “time is of the essence”. 

Get Creative

Landlords today may not be taking the necessary time to get to know their tenants and are focusing on the paper profile. This includes income, credit score and references. A good way to stand out would be to offer to jump on a zoom call with them or even better, send them a pre recorded video letting them know why you would be the best candidate to rent their home. This will show character and help you stand out from the rest.

Money Talks

The higher the income, the more comfortable the landlord will feel with having them as a tenant. The same goes with credit scores. You can put more people on the application (If needed) to increase the income that is shown on the application.  Another strategy would be to pay months in advance. You may not earn the highest income, but if you can afford to pay months in advance, it shows the landlord that you are good with money and have the ability to save. Especially with today’s prices.

Representation

Working with a local agent can be very beneficial when facing bidding wars.  Real estate agents build relationships with other agents and help each other when possible. If you are working with a local agent, they will know some of the other agents representing the landlords. This does not guarantee that you will be chosen over other applicants but it will definitely increase your chances.

Credit

Just like your income, your credit plays a huge role when it comes to standing out amongst other rental applicants. Landlords tend to look for credit scores higher than 700. I understand that a missed payment here or there for any reason can lower your credit. I also understand it’s always a reflection of who you are with your financial responsibilities. in a rental market where there isn’t enough time for explanations, a strong guarantor to act as a safety blanket for the landlord.

In a market that continues to move in wild directions, these rental tips will help keep you on stable ground and ready to find your next home.

Many in North America have been anticipating an incoming housing “bubble” crash. While it’s not as clear whether we are there, or on the way there, it is evident that  the real estate market has started to shift. That’s why it is important to identify when a market is in transition so that buyers and sellers can plan accordingly. Below are 5 signs the real estate market has shifted. 

Decrease In Bidding Wars

This is probably the first sign and one of the most important signs of a shift. With the drop in demand, the supply will start to increase. This results in less offers, or no offers at all being submitted as buyers now have more options to choose from. If the trend continues, price adjustments are most likely to follow (depending on the home itself and the community pocket you are in).

Expired/Terminated Listings

An increase in expired listings is a HUGE sign that we are in a market shift from a seller’s market to a buyer’s market. During a seller’s market, most homes will be sold before the expiry of the listing contract. The opposite happens during a buyer’s market as buyers have the opportunity to take their time and be more selective before putting in an offer. 

Absorption Rate

The absorption rate is the rate used to measure how fast homes are being sold over a specific period of time. The absorption rate is basically the number of months that it takes for the current inventory on the market to sell. When homes take longer to sell, this is another market shift indicator. This change can happen very quickly and surprise sellers. It is always good for you and your listing agent to keep up to date with the market.

Economy

Real estate markets can often be tied to the economy as a whole. Changes in investments like stocks and bonds can provide insight to the direction of the economy, and in turn, the direction of the real estate market. The more stable the economy is, the stronger the real estate market. Of course in more turbulent times, real estate can be affected.

Interest Rates

When the government increases interest rates, both the economy and the market can begin to stall. As borrowing costs become more expensive, the buying motivation begins to disappear. So while housing prices may drop, the ability of buyers to secure financing drops with it. So don’t be fooled by dropping prices, there is an underlying consideration. As central banks continue to raise rates, lending institutions increase their mortgage rates which in turn makes it more expensive. This is as clear an indicator of a market shift as there is. 

Final Thoughts

Stay away from media headlines that spark fear. Speak with your real estate advisor about the current market shift and how you as a seller or buyer can navigate through it. There are always opportunities out there that you can take advantage of. Yes, prices have started to adjust and yes properties are taking longer to sell. Do your research, stay educated consider your options. Use the 5 signs the real estate market has shifted.