Everything affects the housing market. if the interest rates go up .25% it affects the market. Job rate, solds, inventory, immigration, the dollar, and many more factors go into what will make or break a market.
Here are a few things that could affect the market in either direction:
1. Gas: Over time, if people have more money in their pockets, they can save more. Someone like me has been saving $30 per tank, 3x a week, that’s right roughly $400 a month, and that’s about $6000 a year, give or take. That amount of money is a small deposit on a condo development.
2. Dollar: If the dollar goes down, that means more foreign investment in Real Estate, and in manufacturing. More Manufacturing and Real Estate buys, the market goes up.
3. Immigration: The immigration rates will rise or stay the same depending on policy, but it is not going down, Canada needs immigration to bring in more money and the government knows that. This will keep the market steady.
4. Interest Rates: The interest rates will go up this year and it will affect the market. Depending on how much they go up will determine how much it will change things.
5. Inventory: In some areas there is a lot of inventory while other not so much. This affects the market in that it makes things hard to determine. Forget everything about pricing, and comparables, if the inventory level is high or low will effect your price significantly. Supply and demand.
There are so many factors that can change the market. The past has shown us that any number of things can change things and the market.
This is not new news but, I thought I would mention it for all of the people thinking of buying a condo near Square One Soon.
The new building is expected to be completed in the summer of 2016 and ready for students that September. The expansion will enable Sheridan to accommodate up to an additional 3,200 full-time students The expansion of the campus will further support the City’s Downtown21 plan to create a vibrant downtown, attract and retain youth, create great public spaces and develop talent.
For an investor this is great news. More students, more rental demand. There are a few projects underway and two more phases of the mirage buildings which will have phase 2 complete by then, and a phase 3 will be underway. If you are interested let me know, I can send you information on this project.
When the market spikes so high in a certain area while other markets are slow it is called a bubble. This can happen in a country, city or neighbourhood. For the past year and a half or so its been happening in the GTA. This is great for people selling properties but if you are buying a property watch out. In the GTA there are a huge number of speculators in the market and people who buy when the market is low. The purpose is to renovate and resell, then make a profit. In this type of market it is extremely difficult to buy low because everything in the bubble is high. These buyers are constantly looking for the bubble to burst and waiting to pounce like a lion.
There are always reports of the market dropping due to economy, inflation, and of course the unemployment rate. While these are all major factors the biggest factor that will drop the market is Interest rates. This controls the market as well as the other factors. If you go south it is a mess and the government is trying everything to spark the housing economy. The problem is that it is still very hard to get financing when you don’t have a job. This is an example of a market gone haywire.
Nobody knows what will happen in any economy but here are a few reasons why a market drop is good for the economy to stay balanced for the future. Now I’m saying a little drop, not a fall to the center of the earths core.
1. It will further stimulate the buying of properties
2. It will stimulate construction due to companies buying and selling, renovating
3. Depending on how much the interest rates go up, it will allow some buyers into the market to buy their first home.
4. There is more scrutiny on the homes that are bought and some homes are forced into renovation allowing a better inventory. This is due to more clauses in contracts. More clauses means a seller will make sure that the proper maintenance has been done. Home Inspections and Finance clauses are not waived in this market.
5. House prices will catch up to income of buyers. In a market bubble, many peoples income does not support the average price. Therefore more money must be spent on the purchase price. In a market drop incomes are allowed to catch up, therefore more houses are affordable.
A market bubble is happening right now in the GTA, ask any agent north of the city. While it has been a crazy year for asking prices, the market has slowed down a bit. This is also due to seasonal lows. The market however does not show any means of slowing down, but …. there are factors that indicate a burst, stock market drops, inflation rates going higher, gas prices staying high, unemployment at an all time high and our dollar staying high slowing down manufacturing jobs. Most of all is the world economy seems to be in spinning out of control. Eventually it has to catch up to our little market bubble here in the Greater Toronto Area.
This article was written by Ernie Arrizza
With the HST looming over our heads and the rising interest rates in the coming months there is going to be another factor that will slow our sellers market down. It happens every year around this time. More people listing of course. This is the month that most people like to list their property. The reason; good weather and more buyers. More people like to have garage sales, do their renovations and put their house up for sale. It happens every year. This year is no different only in that people who were possibly thinking about selling their house later on in the year might be swayed to sell now since almost every house is selling for asking price or over the asking price.
My advice to buyers is not to get caught up in the circus. If you have to move because you sold your house make sure you have plenty of time. This is a benefit because you don’t have to fall into a bidding war. You can wait for the deal you want. There are going to be plenty more listings on the market maybe too many. This is going to drive the price down a bit. There are going to be too many listings out there. The way buyers get trapped is that they are in a crisis because they waiting too long to start looking for houses. After they are in a situation where they have to pay a significant amount more for the house they wanted. Then they think that maybe they shouldn’t have sold their house in the first place. That is not a great situation. Work with your agent and if there is something you like on a street and it is receiving multiple bids ask your agent to do some door knocking or phone calls to the neighborhood to see if anybody else is thinking of selling on the street. Maybe your agent can work with people who are on the fence and then because there are no other offers you can come to a price that might be lower than the house down the street.
Look for houses that have been on the market for a while. Maybe the sellers are pricing the house too high and are willing to come down. Look for houses that have steadily come down in price. These people are motivated to sell.
If you would like to start your search please call me! 905-277-1805