Eugene  Feiguelman

Eugene Feiguelman

Broker

HomeLife/Response Realty Inc., Brokerage*

Mobile:
647-294-6826
Office:
905-949-0070
Email Me
Eugene  Feiguelman

Eugene Feiguelman

Broker

HomeLife/Response Realty Inc., Brokerage*

Mobile:
647-294-6826
Office:
905-949-0070
Email Me

October 2018 News

 
Market conditions in the summer of 2018, including this past August, were tighter than what was experienced in the summer of 2017. From the summer market we smoothly transitioned to the fall market. A large number of potential buyers were waiting on the side expecting for the market to cool off and to get a better deal, as well as more variety of choices.
 
At the same time, house owners whose houses didn't sell in the previous year and the first half of this year were waiting on the curb. They also waited to jump in and dreamt of getting the first half of last year’s conditions back, and thus to sell with a great price. Now in the beginning of October, we can surely say they were both wrong:
 
Housing market is not headed for a major correction.
 
If you were hoping for a significant drop in home prices (and according to a recent Angus Reid survey, a whopping 27 percent of respondents are hoping for a major crash), you will be disappointed to hear that the housing market is quite robust in Mississauga and surrounding cities. Overall, various reports and predictions anticipate a fairly stable Canadian housing market with no major short-term corrections over the next three to five years. In markets where there are house price increases, those are expected to continue to moderate, and could be offset by higher income.
 
The largest corrections will be in those metro areas that have a combination of recent house price declines, high overvaluation and slower projected income growth. In my opinion, it will mostly affect such cities as Barrie and Oshawa, and potentially the Hamilton and Niagara region.
 
At the same time, in my opinion there is still a risk for a mid-high price correction on the housing market.
 
With the introduction of the United States-Mexico-Canada Agreement, an October rate hike by the central bank now appears to be a lock, analysts say, with more expected to follow in 2019. This interest rate hike will lead to a situation where the majority of house owners holding variable rate mortgages will be paying more. In the past, the price of borrowing 100,000 was around $423, and now it is around $480 - this is a reality.  The monthly payment, on average, will be increased by $300 per month/per house holder. Next year, if the government hikes the interest rate by 0.75% as they say, the monthly payment will be increased by $500 instead. Therefore, Canada’s economy faces a major risk through the next three years from how debt-laden consumers cope with higher interest rates, according to economists from three of the country’s largest financial institutions.

I found this very interesting reverse mortgage calculator. It will give you ability to change your comfortable monthly payment in $ and the interest rate to see how much mortgage you can afford.  You can play with the rates and monthly payments here: http://homeownership.ca/mortgage-payment-calculator/

In the meantime, the major changes in consumers’ approach to real-estate should be a long-term commitment. You shouldn't buy a house or a condo if your short-term goal is to double your money and to cash out, but rather with a long-term goal of planning and a better quality of life. There is no doubt a long-term attraction of buying real estate to preserve and to increase your wealth. It is just a speculative component of the housing market, as it is under a big question "to be" or "not to be.”

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