Nicki Skinner

Looking to the year ahead

22 January 2019
Nicki Skinner

January... time to plan ahead!


Phew!  Holidays are over, kids are back at school, work seems normal and you pretty much know what day of the week it is. I took a quick trip to Iceland (amazing) and now that I've cracked open my new Daytimer (old school) it's a great time to make a few plans for the weeks and months ahead.  

 



Dusting off the Crystal Ball....


The "best of 2018" lists are old news and now everyone is making predictions.  You probably have thoughts of your own, so I borrowed mine from a few financial experts.  Once I combed through theirs, I added my own two cents and came up with an easy to read version for the Toronto Real Estate Market. Let me know what you think.

That pesky bubble that's been 'bursting' since 2015/16/17/last week.   Still not going to happen here.  I know stocks have been volatile and there is uncertainty in the air, but this is one of those situations where the housing market's biggest risk is people manifesting a major correction.  I'm serious.  Despite the financial indicators for a relatively stable housing market, if enough buyers and sellers hold off because they think there will be a crash, they will create the crash. The sky is not falling - yet.

But Nicki, what about rising interest rates?  If they keep going up, no one will be able to afford their mortgages and everyone will have to sell!  Not so fast, Henny Penny.  It's true, mortgage rates have gone up a bit.  But not as fast as the Bank Of Canada intended.  They've held off on two recent potential increases, and it's highly likely they will do so again in spring. So banks hopefully won't increase rates, either.  In fact, there was aminor decrease in January that caught a lot of us off guard.

If you bought within the past year, you were probably subjected to a mortgage stress test, which looked at your ability to afford a mortgage at 2% higher than the current rate.  We all ranted and raved, but it may actually have been a good thing for some buyers who were potentially taking on more debt than they should.  When you renew in 5 years, you will hopefully have increased income, making higher payments easier to manage. For anyone with a mortgage coming due in the next year, start talking to your mortgage provider soon. Rates are still very low and locking in now could actually be a good move, even if you face a penalty vs. a higher interest rate later in the year.  Consensus is that when rates do increase over the next year, it will start in the 2nd quarter and total up to 1% by the end of the year.   Short term pain now vs. long term higher mortgage pain later. Important note: if you switch mortgage providers, you could be subject to the stress test at the new lender.  Does this basically tie you to your current lender?  Yup.

The news says prices are dropping. The news isn't looking at micro markets.  They take the headline from the Canadian reports without looking into smaller markets.  Even in the GTA, prices are acting very differently in different areas.  Downtown Toronto is still in an upward direction, despite (or because of) fewer listings. The east end (Riverside, Riverdale, Leslieville, Danforth...) is seeing the biggest increase, possibly because prices are still slightly lower than the west end.  That gap is closing. Investment properties across the city are seeing a slight decline, because the days of flipping are done.  Unless you are a serious pro who can renovate at cost, you will not see a quick profit.  There are still a few neighbourhoods with potential that I think are great for first-time buyers. 

Are condos still going up faster than anything else?  Yes, but even that market has seen a slight softening.  But that just means prices are going up 7% this year instead of 10%.  Part of that is because there is going to be a pretty decent influx of finished units on the market, much higher than we've seen in the past year or two.  Speculators will be selling.  Personally, I think a brand-new unit from a good builder that is still under warranty is a great option.  But re-sale units will also adjust thier prices based on the increased supply.  
 


Is this your year to make a move?


Whether you're thinking of buying, selling, or renting this year, any type of move takes lots of planning.  You probably want to catch the hot spring market, right?   The spring market starts in February. 

Buyers: If you want to buy this spring, talk to a mortgage expert NOW.  Talk to more than one.  Don't be afraid to shop around, play them off each other, and ask for better terms.  There is more to a mortgage than the interest rate.  Can you pay off a chunk every year?  Several times a year? Monthly, weekly, or bi-weekly payments?  20, 25 or even 30 year amortization.  And of course, fixed or variable rate?  This is not a quick decision.  And there is no point in looking at properties unless you know what you can afford and what the bank is willing to lend.  I can recommend some great mortgage brokers, and help you get the house you want.

Sellers:  A month of prep is a great start.  Whether it's your own home or an investment property with tenants, there is always lots to do. We can plan a strategy, declutter, patch and paint, stage, take photos on the perfect day, generate a buzz, put you at the top of the wish list, and get you the best possible price for your property.  

Tenants:  The constant dilemma - you need to give 60 days notice but all the best places come out 30 days before you move.  True.  But once the decision is made, you need to collect all your application paperwork and have a great package ready to go when the right place does come up.  Vacancy rates are as low as ever.  Let's start researching now so you know when, where, and how to make your move.

Landlords:  If you've received the 60 day notice, take stock of the apartment now.   Let's talk to your tenants and create an environment where you can find another great tenant with as little stress as possible - for everyone.



Thinking about making a move? "We Need To Talk."
I'm literally a click away. 
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