Rental properties are a secure long-term investment. Note the emphasis on “long-term”.
Check out any seven-year period over the past 50 years (anyone who has read this news site knows that I always recommend buying and holding for at least seven years). Property values have almost always risen.
Sure, the last five or 10 years have seen fantastic appreciation in almost every part of Canada. But, let’s leave capital appreciation out of the equation for now.
Why aren’t we talking about rental income? Or, how about the equity growth through your mortgage being paid down each year?
RENTAL INCOME IS UP, UP, UP!
Part of what makes rental properties attractive is that rent rises with inflation (or even higher, in many cases, as we have seen in urban markets like Toronto and Vancouver). This is how you create your own pension or retirement income!Continue reading “Real estate may not be sexy, but…”
The annual State of Homebuying in Canada report noted that 56% of all purchasers were first time buyers in 2018. This dropped to 47% in 2019.
The tightening of mortgage rules which has been taking place over the last 4 years is certainly having an effect. The never ending rule changes were intended to slow home sales and prices. But like most government interventions, its had the opposite effect.
Mortgage rates fell by about 1% since January of this year. That rate drop has created a surge in real estate sales across Canada, with September and October seeing a greater than average number of real estate transactions. We also saw consumers taking advantage of these low rates by refinancing their mortgages early.
The Five-Year Government of Canada bond yields have been going up and down like a yo-yo over the last three months, with a low point being 1.13% and a high of 1.58% just this past week. This uncertainty/volatility forced financial institutions to raise their interest rate by about .2% to .3%. Having said that, interest rates are still very low. In my discussions with the major lenders, they are all telling me that it’s busier than usual for home purchases and refinance purposes. Continue reading “Important week for mortgage rates could cost or save you thousands.”
The BoC raised rates FIVE TIMES between July 2017 and October 2018. That’s a 1.25% increase. For anyone with a $300,000 mortgage, your payment increased by $189 per month. Or, to put it another way, for every $100,000 of mortgage, your payment went up by around $63 per month.
Yet, we kept hearing that the BoC wanted to raise rates further. Economists and other experts were saying we should expect more rate increases by the end of 2018! Wow!
Ontario’s controversial rent control is about to come to an end – and that’s a positive change!
When I was attending a speaking session with one of my favourite economists – Benjamin Tal – a few weeks back, he had a great quote: “There’s a Swedish economist who said, ‘Rent control is the best way to destroy a city, maybe besides bombing it.’”
Isn’t that the truth?!
In the GTA, rental units are scarce. And, says Tal, rent control would only further diminish the already depleted supply of available units.
Remember all those pessimists who were calling for a housing bubble or collapse?
If you listened to them and rented for the past eight years, how much would you have lost? How much would your rent have increased since then? And would you still be able to rent that condo or house… or would your landlord possibly have plans to sell it and leave you out in the cold?
We used to expect an economic slowdown or recession every five years. But something happened after the last big recession in 1990. Since then, there has really only been one recession: in 2009.
This came off the heels of the infamous US subprime mortgage crisis that crippled most of the world’s economies for years. Yet, in Canada, we got off relatively easy. Our slowdown lasted less than a year.
Let’s forget about hot and cold real estate markets for a second. I realize that’s hard to do with so many media outlets pushing opinions. But, let’s look at historical trends and patterns that have remained consistent for well over 30 years.
The Spring housing market is the best time to sell. Sale prices are usually highest from February to June. It’s also going to provide buyers with the most selection as the number of listings usually increases.
But, it’s important to remember, however, that the Spring’s not always the best time to buy.
Could 2018 be the year where the pessimists finally get their way? I hate to admit it, but this could be the year where buying a home may not be a good idea.
OK, just kidding!!!
But after years of seeing countless articles and posts about rising interest rates, housing affordability issues, mortgage stress tests disqualifying some people from being able to buy, higher personal debt levels, NAFTA economic fears and Donald Trump (ok, Trump has nothing to do with this, but you can’t write an article these days without blaming him, right?!), does it still make sense to buy a home?
Yes! There is positive news. You can still buy a home. And you can still qualify for a mortgage.
There’s nothing surprising about the loosening of mortgage standards to spur growth. In the last real housing bubble of 1990, banks and government brought in stricter lending rules, making it tougher for borrowers to get a mortgage.
Fast forward to the present. We’ve yet to see a housing bubble or market crash, but the government has taken drastic – perhaps even unheard of – precautions to slow the housing market.
In 1990, I was working for the largest trust company in Canada. I can tell you that it has never been harder to qualify for a mortgage than it is today!
Ever since the US 2008 sub-prime mortgage crisis, we’ve seen a never-ending string of change. Mortgage lending rules have become tougher and tighter. Underwriting is stricter and more thorough. (As usual, the government has not missed an opportunity to stick their nose into your business by making lenders ask for more income documentation.)
A few years back, I had the privilege of hearing one of my childhood idols – former Toronto Maple Leafs captain, Darryl Sittler – speak at a Real Estate Investment Network (REIN) meeting.
In case you haven’t heard of REIN, let me share some details about this group of real estate investors that gets together to network and share valuable information affecting real estate in Canada. The leader of the group is Don Campbell. His approach to buying investment properties has proven to be very sound and profitable. In fact, his “Top 10 Best Cities to Invest” lists are legendary! Continue reading “Darryl Sittler made his fortune in Real Estate… not Hockey!”
Rental vacancies are ridiculously low and demand for rental units is high… and growing!
That’s just a sampling of the opportunistic real estate investment news Ted Tsiakopoulos, CMHC’s Regional Economist for Ontario, shared recently at the Canadian Mortgage Brokers’ Association (CMBA) of Ontario annual conference.
Here are other main takeaways:
Strong 2017 economy helped ease imbalances
Sales and new home starts expected to slow
Prices to grow moderately
Eastern & Western Ontario will outperform Southern Ontario
Mortgage delinquencies remain at record lows – much lower than credit card or car loan debt
Trying to decide what’s the best move can be difficult… and, I must admit, this isn’t an easy subject to tackle. There are so many opinions! But it’s important enough that I’m going to put my two cents into the discussion. (My final recommendations are listed at the bottom if you want to fast forward.)