It's January and I have a bit of an update, but first... Happy New Year! The new year has ticked over to 2022 - and so far it's the same old same old. Not much has changed since last year, really.
2021 in real estate we had a 20 percent increase in property values that has never ever seen before and possibly never (well, never say never!) will be seen again. My prediction for 2022 is that things will go up - they are going to increase -we will keep going up a little bit.
Rumour has it that rates are going to go up - there may be 4 rate increases in 2022 starting in March. The thing to keep in mind is that they are going to be very small, incremental increases which will do very little to affect a person's mortgage. The numbers I saw were (on the average mortgage) an increase of $50 a month or so - but if you see 4 to 6 of these, then we may start to see something happening. When people get a mortgage, they generally lock in for 3 months, so if they announce the rate increase in March, you're looking at June when it will start to take effect.
They're predicting that the market is going to go up 7-12 percent - I think it's going to be 9 or 10 percent. I think that we can have the gains up until June and then after that a slight decline, but I don't think so. Or we'll just have a steady trickle up - and even if March when the rates do change, I don't predict a big difference. I can't see a crash, like some people out there are predicting. Rates are going to go up and after that it's going to head down. It's not doing to happen like that. I have a feeling we're going to be flat for a few years. That's my thinking, at least until rates increase and the significance of that increase really starts to kick in. By then, immigration will start to kick in again (hopefully - if this pandemic is over!) and If that happens, it will fill the void, in a way.
One thing I'd like to mention, that no one talks about is that one out of every four purchases right now is an investment property. Basically, people are taking equity out of their homes because it has gone up so much in the past couple of years . They've taken HELOC (home equity) loans and bought a secondary property. Because of this, I'm seeing the number of rentals really starting to tick up. Everybody knows that with supply and demand, when supply is high, demand decreases . And when demand is high and supply is low, prices go up. I think the increase in supply is going to put a bit of downward pressure on rents, so I can see rents coming down a bit. Another fact is that rents have increased so much in the past couple of years that people just can't afford them. You're not going to borrow fifty thousand dollars to pay the rent. You're not all of a sudden going to get a job that pays thirty percent more. It doesn't work like that . Renters get to a point where they just can't afford things so they consolidate, they get roommates -all sorts of different ways to survive.
I can see the rental market increasing as far as volume goes and I think the prices are going to come down a bit. Who knows, this could be one way that corrects the market that people haven't really talked about. The average investor - they have their own property (their rental property) and they can't get the original amount they wanted to get (say $2800 a month). Now, they're getting $2500 a month and they have a 300 a month gap that they have to fill themselves. So, there is a possibility that more of these may be coming on the market in the next year or two. Definitely something to think about.
If you have any questions about the current real estate market, mortgages, home sales, rentals... in Halton Hills, Georgetown, Acton, Brampton, Mississauga, Milton - please don't hesitate to call, message, or email - I'm always available to chat. Take care and stay safe!
2021 in real estate we had a 20 percent increase in property values that has never ever seen before and possibly never (well, never say never!) will be seen again. My prediction for 2022 is that things will go up - they are going to increase -we will keep going up a little bit.
Rumour has it that rates are going to go up - there may be 4 rate increases in 2022 starting in March. The thing to keep in mind is that they are going to be very small, incremental increases which will do very little to affect a person's mortgage. The numbers I saw were (on the average mortgage) an increase of $50 a month or so - but if you see 4 to 6 of these, then we may start to see something happening. When people get a mortgage, they generally lock in for 3 months, so if they announce the rate increase in March, you're looking at June when it will start to take effect.
They're predicting that the market is going to go up 7-12 percent - I think it's going to be 9 or 10 percent. I think that we can have the gains up until June and then after that a slight decline, but I don't think so. Or we'll just have a steady trickle up - and even if March when the rates do change, I don't predict a big difference. I can't see a crash, like some people out there are predicting. Rates are going to go up and after that it's going to head down. It's not doing to happen like that. I have a feeling we're going to be flat for a few years. That's my thinking, at least until rates increase and the significance of that increase really starts to kick in. By then, immigration will start to kick in again (hopefully - if this pandemic is over!) and If that happens, it will fill the void, in a way.
One thing I'd like to mention, that no one talks about is that one out of every four purchases right now is an investment property. Basically, people are taking equity out of their homes because it has gone up so much in the past couple of years . They've taken HELOC (home equity) loans and bought a secondary property. Because of this, I'm seeing the number of rentals really starting to tick up. Everybody knows that with supply and demand, when supply is high, demand decreases . And when demand is high and supply is low, prices go up. I think the increase in supply is going to put a bit of downward pressure on rents, so I can see rents coming down a bit. Another fact is that rents have increased so much in the past couple of years that people just can't afford them. You're not going to borrow fifty thousand dollars to pay the rent. You're not all of a sudden going to get a job that pays thirty percent more. It doesn't work like that . Renters get to a point where they just can't afford things so they consolidate, they get roommates -all sorts of different ways to survive.
I can see the rental market increasing as far as volume goes and I think the prices are going to come down a bit. Who knows, this could be one way that corrects the market that people haven't really talked about. The average investor - they have their own property (their rental property) and they can't get the original amount they wanted to get (say $2800 a month). Now, they're getting $2500 a month and they have a 300 a month gap that they have to fill themselves. So, there is a possibility that more of these may be coming on the market in the next year or two. Definitely something to think about.
If you have any questions about the current real estate market, mortgages, home sales, rentals... in Halton Hills, Georgetown, Acton, Brampton, Mississauga, Milton - please don't hesitate to call, message, or email - I'm always available to chat. Take care and stay safe!