There's an upside to higher interest rates, despite the pain to borrowers
Interest rates have risen rapidly this year and with inflation running higher than the Bank of Canada target, more increases are sure to come. While much attention has been paid to the negative implications of higher rates, which raise the cost of borrowing, there are benefits as well.
The first question on the minds of Canadians is just how high rates are going to go, something Central bank governor Tiff Macklem addressed last week when he testified before the House of Commons Standing Committee on Finance.
According to Macklem, “Canadians should expect interest rates to continue to rise toward more normal settings … that neither stimulates nor weighs on the economy. We estimate this rate to be between two per cent and three per cent. Two weeks ago, we raised the policy rate to one per cent, still well below neutral.”
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Interest rates have risen rapidly this year and with inflation running higher than the Bank of Canada target, more increases are sure to come. While much attention has been paid to the negative implications of higher rates, which raise the cost of borrowing, there are benefits as well.
The first question on the minds of Canadians is just how high rates are going to go, something Central bank governor Tiff Macklem addressed last week when he testified before the House of Commons Standing Committee on Finance.
According to Macklem, “Canadians should expect interest rates to continue to rise toward more normal settings … that neither stimulates nor weighs on the economy. We estimate this rate to be between two per cent and three per cent. Two weeks ago, we raised the policy rate to one per cent, still well below neutral.”
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This suggests a neutral rate environment that is one to two percentage points higher than today. The prime rate at banks is 3.2 per cent, so line of credit and mortgage rates of over five per cent are feasible. This is a far cry from the sub-two-per-cent rates that were available in 2021 — suddenly the implementation of the mortgage stress test in 2018 seems more prudent.
One eventual benefit of higher interest rates is that borrowers will have a more realistic monthly payment for their debts. Although the mortgage stress test qualified a borrower based on a higher interest rate, borrowers have become accustomed to artificially low monthly payments with little interest.
If a five-year mortgage amortized over 25 years at two per cent renews at five per cent, the payment would need to increase by 30 per cent to maintain the remaining 20-year amortization. For the monthly payment to remain the same at the higher rate, the amortization would need to increase to more than 34 years (so, over 39 years in total). Canada actually had 40-year insured mortgage amortizations for less than a year between 2007 and 2008 but promptly reduced amortizations in response to the U.S. subprime mortgage meltdown, which set off the Financial Crisis.
Higher rates may cause a strain for highly indebted borrowers in the short run, but over time they may also help recalibrate housing budgets for borrowers based on real life monthly payments. This may also help stabilize the housing market, hopefully leading to a soft landing instead of a housing crash.
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One eventual benefit of higher interest rates is that borrowers will have a more realistic monthly payment for their debts. Although the mortgage stress test qualified a borrower based on a higher interest rate, borrowers have become accustomed to artificially low monthly payments with little interest.
If a five-year mortgage amortized over 25 years at two per cent renews at five per cent, the payment would need to increase by 30 per cent to maintain the remaining 20-year amortization. For the monthly payment to remain the same at the higher rate, the amortization would need to increase to more than 34 years (so, over 39 years in total). Canada actually had 40-year insured mortgage amortizations for less than a year between 2007 and 2008 but promptly reduced amortizations in response to the U.S. subprime mortgage meltdown, which set off the Financial Crisis.
Higher rates may cause a strain for highly indebted borrowers in the short run, but over time they may also help recalibrate housing budgets for borrowers based on real life monthly payments. This may also help stabilize the housing market, hopefully leading to a soft landing instead of a housing crash.
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Virtual reality is shaping the future of real estate
Saving on construction costs and creating realistic spaces that can be viewed and modified remotely opens a parallel dimension for design and sales
Remote work and online sales received a boost during the pandemic and led to changes in how real estate was sold. Virtual tours and remote signing became options for many buyers as the industry pivoted to address the new environment.
But for developers, the traditional display suite remains the cornerstone of sales efforts, providing a physical, tangible encounter with what a future home will be like.
“It’s proven. You can’t debate that it works,” said Hani Lammam, executive vice-president, Cressey Development Group, of traditional presentation suites. “My perspective is that this is such a big decision, you want to be able to touch it and feel it. This is a big investment for people.”
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Saving on construction costs and creating realistic spaces that can be viewed and modified remotely opens a parallel dimension for design and sales
Remote work and online sales received a boost during the pandemic and led to changes in how real estate was sold. Virtual tours and remote signing became options for many buyers as the industry pivoted to address the new environment.
But for developers, the traditional display suite remains the cornerstone of sales efforts, providing a physical, tangible encounter with what a future home will be like.
“It’s proven. You can’t debate that it works,” said Hani Lammam, executive vice-president, Cressey Development Group, of traditional presentation suites. “My perspective is that this is such a big decision, you want to be able to touch it and feel it. This is a big investment for people.”
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These real estate changes would actually make housing affordable
Canada's politicians could (but won't) do these 5 things to make housing more affordable
Even though the federal government has focused on affordable housing in their new budget, the price of real estate remains unattainable in some parts of the country.
Many young people are completely priced out unless they’re willing to move to another province, while others are taking on record debt levels. Unfortunately, real estate has become a status symbol for success and many Canadians are going all-in.
The funny thing is, if any government really wanted to make housing more affordable, they would just have to implement a few hard rules.
Doing so would be difficult and stir up controversy. The change would mean falling house prices at a time when owners have come to expect prices always to rise. Hence, the politician to drop housing prices would risk being voted out in the next election.
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Canada's politicians could (but won't) do these 5 things to make housing more affordable
Even though the federal government has focused on affordable housing in their new budget, the price of real estate remains unattainable in some parts of the country.
Many young people are completely priced out unless they’re willing to move to another province, while others are taking on record debt levels. Unfortunately, real estate has become a status symbol for success and many Canadians are going all-in.
The funny thing is, if any government really wanted to make housing more affordable, they would just have to implement a few hard rules.
Doing so would be difficult and stir up controversy. The change would mean falling house prices at a time when owners have come to expect prices always to rise. Hence, the politician to drop housing prices would risk being voted out in the next election.
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For purely entertainment value, let’s look at some real estate rules that would actually make housing more affordable.
1. Reduce amortization periods
2. Mortgage application verification from a third-party
3. Increase minimum down payments
4. Increase taxes on additional properties
5. No more blind bidding
1. Reduce amortization periods
2. Mortgage application verification from a third-party
3. Increase minimum down payments
4. Increase taxes on additional properties
5. No more blind bidding
🔸 کاهش 41 درصدی معاملات مسکن تورنتو در ماه اپریل
● انتشار گزارش جدید موسسه TREB از کاهش عرضه ملک به بازار، کاهش متوسط قیمت املاک معامله شده و سرد شدن بازار خرید و فروش املاک تورنتو در ماه اپریل خبر میدهد.
● براساس این گزارش در شرایطی که در مارچ 2022 متوسط قیمت فروش املاک مسکونی در نقاط مختلف تورنتو 1.3 میلیون دلار بوده، این میانگین در ماه اپریل به 1.2 میلیون دلار کاهش یافته است. واحدهای مسکونی لیست شده برای فروش در اپریل نیز 18,413 مورد بوده که نسبت به مدت مشابه سال قبل 12 درصد کاهش را نشان میدهد.
● مناطق اطراف تورنتو شامل میسی ساگا، وان، نیومارکت، ریچموندهیل و جورج تاون در ماه اپریل همچنین شاهد کاهش قابل توجه فروش املاک مسکونی نسبت به مدت مشابه سال قبل بوده اند:
👈 خانه های دیتچد معامله شده: 2,732 مورد ( 47% کاهش)
👈 تاون هاوس های معامله شده: 1,033 مورد ( 44% کاهش)
👈 سمی دیتچد معامله شده: 491 مورد (40% کاهش)
👈 کاندوهای معامله شده: 685 مورد(%32 کاهش)
● افزایش نرخ بهره و کاهش قدرت خرید مردم از جمله دلایل تاثیر گذار در بازار اعلام شده است.
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● انتشار گزارش جدید موسسه TREB از کاهش عرضه ملک به بازار، کاهش متوسط قیمت املاک معامله شده و سرد شدن بازار خرید و فروش املاک تورنتو در ماه اپریل خبر میدهد.
● براساس این گزارش در شرایطی که در مارچ 2022 متوسط قیمت فروش املاک مسکونی در نقاط مختلف تورنتو 1.3 میلیون دلار بوده، این میانگین در ماه اپریل به 1.2 میلیون دلار کاهش یافته است. واحدهای مسکونی لیست شده برای فروش در اپریل نیز 18,413 مورد بوده که نسبت به مدت مشابه سال قبل 12 درصد کاهش را نشان میدهد.
● مناطق اطراف تورنتو شامل میسی ساگا، وان، نیومارکت، ریچموندهیل و جورج تاون در ماه اپریل همچنین شاهد کاهش قابل توجه فروش املاک مسکونی نسبت به مدت مشابه سال قبل بوده اند:
👈 خانه های دیتچد معامله شده: 2,732 مورد ( 47% کاهش)
👈 تاون هاوس های معامله شده: 1,033 مورد ( 44% کاهش)
👈 سمی دیتچد معامله شده: 491 مورد (40% کاهش)
👈 کاندوهای معامله شده: 685 مورد(%32 کاهش)
● افزایش نرخ بهره و کاهش قدرت خرید مردم از جمله دلایل تاثیر گذار در بازار اعلام شده است.
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Supply is 'the biggest issue affecting housing affordability' in Canada, CMHC finds
New housing starts have struggled to keep up with population growth in some of Canada’s large cities, especially Toronto, making affordability a “significant” challenge, according to the Canada Mortgage and Housing Corporation’s first in a series of reports to get a better handle on the country’s housing supply and its impact on affordability.
“The biggest issue affecting housing affordability in Canada is that supply simply isn’t keeping pace with demand.”
But the housing authority added that the situation is complex, with several reasons behind steep, continued price escalation in recent years.
Work is currently underway at CMHC to estimate the number of housing units needed in many parts of the country in order to make the real estate market more affordable. In addition to demographics, several economic factors are considered in this analysis, such as the effect of household income on housing demand.
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New housing starts have struggled to keep up with population growth in some of Canada’s large cities, especially Toronto, making affordability a “significant” challenge, according to the Canada Mortgage and Housing Corporation’s first in a series of reports to get a better handle on the country’s housing supply and its impact on affordability.
“The biggest issue affecting housing affordability in Canada is that supply simply isn’t keeping pace with demand.”
But the housing authority added that the situation is complex, with several reasons behind steep, continued price escalation in recent years.
Work is currently underway at CMHC to estimate the number of housing units needed in many parts of the country in order to make the real estate market more affordable. In addition to demographics, several economic factors are considered in this analysis, such as the effect of household income on housing demand.
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Industrial Rd
Richmond Hill, Ontario
Industrial
For Sale Listed for: $6,399,000
5 Bathrooms
Property Type: Industrial
Size: 15,200 feet²
Lot Size: 110.08 × 278.55 feet
Annual Property Taxes: $23,288.13
Total Parking Spaces: 10
Height: Approx. 14 to 18 feet
Description:
Rarely Offered Well Maintained "Free-Standing Building" In The Heart Of Richmond Hills! Divided Into 2 Units. One Unit Is Tenanted And One Is Currently Vacant, W/Ample Parking. Close To All Amenities And Easy Access To Hwy 404. Front Of The Bldg Has Appox.14 Ft Clear Height, Rear Has Approx. 18 Ft Clear Height. 3 Drive-In Doors. Many Improvements Over The Last Several Years Have Been Completed. Permitted Uses Include Manufacturing And Industrial Operations, Warehousing And Storage.
For Booking please call:
Hojjatollah Izady
Realtor
HomeLife/Cimerman Real Estate Ltd., Brokerage
647-772-9502
hoizady@yahoo.com
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Richmond Hill, Ontario
Industrial
For Sale Listed for: $6,399,000
5 Bathrooms
Property Type: Industrial
Size: 15,200 feet²
Lot Size: 110.08 × 278.55 feet
Annual Property Taxes: $23,288.13
Total Parking Spaces: 10
Height: Approx. 14 to 18 feet
Description:
Rarely Offered Well Maintained "Free-Standing Building" In The Heart Of Richmond Hills! Divided Into 2 Units. One Unit Is Tenanted And One Is Currently Vacant, W/Ample Parking. Close To All Amenities And Easy Access To Hwy 404. Front Of The Bldg Has Appox.14 Ft Clear Height, Rear Has Approx. 18 Ft Clear Height. 3 Drive-In Doors. Many Improvements Over The Last Several Years Have Been Completed. Permitted Uses Include Manufacturing And Industrial Operations, Warehousing And Storage.
For Booking please call:
Hojjatollah Izady
Realtor
HomeLife/Cimerman Real Estate Ltd., Brokerage
647-772-9502
hoizady@yahoo.com
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