Where are we going from here?
Saturday Jun 11th, 2016
Its a Saturday morning, and I am sipping my coffee. One thought that comes to me is how are our kids going to afford homes when they get to our age. I am totally sure that life will go on and they will be fine, but in the time frame of today could that really be a problem. We all struggle in todays life styles yet we make ends meet and go forth. I decided to write about the hardships of the future with todays present system. As a Realtor with Royal Lepage, our brokerage is quite large compared to others and I see things from a different perspective than the general public. Many people see a crash coming others see prices stabalizing but what does a Realtor see, especially one that has knowledge in investment analysis. Well to put it very clear to you, something will happen but dont expect the price of homes to drop below the year 2000 levels. Were going to see interest rates rise; but how much, maybe 1 to 1.75 percent. Did it ever occur to you that when you go to get a mortgage they pressure test you at a higher rate, that is the government along with the banks trying to figure out how much can this person afford, its a mathematical equation for the country in whole. If we can borrow and still be afloat then so be it, but when you cannot pay at a higher rate then what will happen. So this is where I say "where are we going from here", if there are record homes being sold month after month, will this eventually catch up to us. I do not think so, remember I said that banks pressure test us so that means that if things change; those mortgages that are being approved as we speak can go at a higher percentage because they already can afford it.
Lets look at construction, the government is approving construction permits in york region in a downward trend, which means as the years go forward we will be building fewer homes per year. What happens to home prices if we still have buyers buying homes. In my eyes home prices will still climb because fewer homes being built to satisfy consumption. Thats why it is still a good time to buy a home now than to wait for prices to drop and for that crash to come well I do not see it in the near future like 2 years or so.
I conclude by saying that home ownership will always be the best investment you can make in your life and for your kids too, coming from a european background; we always want to do something for our offspring and this is probably the best you can do. I know there are other investments out there and there is sometimes greater rewards but Real estate will give you a tangible asset and security to go forward. I was talking to a man yesterday who is very much like the way my Father was, he has a very good net worth but is not a risk taker in life and yet he has a wonderful family, money in the bank and very happy with his life. If this is what you want to achieve, then I suggest to invest into real estate right away.
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