Look on the Bright Side and Find Where You Fit In
2020-08-10 | 08:08:58
Happy Monday Everyone!!
Hope you all had a great weekend and were able to enjoy the great weather here in Southern Ontario.
If you have been following the news reports on the real estate market, the Greater Toronto Area REALTORS reported 11,081 sales through TRREB’s MLS System this past July – a 29.5% increase over July 2019. These sales represent a new record for the month of July.
With the restrictions imposed on us by the COVID-19 pandemic now being eased, along with the pent-up demand from everyone waiting on the sidelines during April and May, buyers and sellers are now happily exchanging real estate.
And with our economy beginning to take stronger hold with people returning to work and the fact that vacations this year are closer to home, the record sales in July is putting calm in the markets for some and, continued unease for others.
The worry, especially that coming from CMHC, is that the end of the mortgage deferrals program the 720,000 plus households used to soften the economic impact COVID-19 caused, will result in a flood of sellers who can no longer afford to keep their homes – here in Southern Ontario and Canada as a whole. CMHC predicts a drop in property values between 8% and 18% over the next few months.
Please note that the over 720,000 Canadians who deferred their mortgage payments represent approximately 15% of mortgages in bank portfolios. If fears from CMHC are realized and 2% of the $493 billion in mortgages default, it would still mean that most people who decided to defer their mortgage did so because they were permitted to do so – and not because they had to.
But, there are many who still need and can buy homes.
Many, over 54%, have not been economically affected at all by the pandemic. The following data comes to us by Will Dunning, the Chief Economist from Mortgage Professionals Canada. The data comes via a survey conducted by Mortgage Professionals Canada of 1,046 Canadians between June 29 and July 13.
Of those surveyed, 21% had seen a reduction in their income because of lay-offs or being paid less and, 16% of respondents indicated they weren’t working previous to the pandemic. A further 9% indicated experiencing some other impact from COVID-19.
So, what is the overall feeling amongst buyers and sellers across Canada?
To answer “pent-up” demands, Will Dunning’s report reveals the following data on what impact COVID-19 has had on people’s decisions to buy a home.
Of those currently owning a home, 76% say COVID-19 has had no impact in purchasing a home. Interestingly, 37% of renters wanting to buy a home say COVID-19 has had no impact in their pursuit of buying a home.
Of those surveyed, 7% of homeowners are planning to purchase sooner than they originally would have in contrast to the 21% of renters who are planning to purchase sooner. Rock bottom interest rates – and the promise from the Governor of the Bank Of Canada for those rates remaining low for at least a few years – definitely contributes to this number of people wanting to change the house they currently live in or, wanting to buy their own home.
Lastly, 17% of current homeowners have had to delay the purchase of a home because of COVID-19 in contrast to the 43% of renters who have had to delay purchasing a home.
I will agree that many see their current dwelling, either owned or rented, as not being able to support the many changes created by COVID-19. Changes requiring work from home; more space inside for a proper office; more space to house an aging loved one or a child enrolling into a post secondary institution; more space outdoors to build a pool or entertaining area. The list can go on and on depending on specific requirements and personal wants.
Over the last week, I wish to congratulate two of my clients who became first time homebuyers.
For both of these family’s, I can honestly say that COVID-19 was not a part of the discussion. Wanting to have a home to call their own to raise their family, was.
Will Dunning’s report states that 75% of people consider their home as a place to live rather than the 25% who consider their home as an investment. Of those homeowners, 90% surveyed are happy to have purchased their home in contrast to the 3% who regret buying their home during the period spanning from 2015 to the summer of 2020.
For my specific clients, they either rented or lived with their parents before moving into their new homes.
As a mortgage professional, the process of qualifying clients remains relatively the same.
To qualify for a mortgage is not simple and despite the pandemic, the fundamentals have not changed. If anything, qualifying for a mortgage has become even more difficult, especially for insured mortgages where the buyer contributes less than 20% of a down payment of the purchase price of the home.
Thankfully, interest rates are super low and there is news that the 4.94% qualifying stress test is to be reduced to 4.79% by the end of the week. This will help many on the cusp be able to buy a home and realize their family’s dream.
My hope for everyone reading is that you continue to focus on how you live your life and how your lifestyle affects your objectives. Continue to save diligently, protect your credit score, live within your means and, continue towards achieving your goals.
Please contact me anytime to know where your financial position stands regarding the mortgage financing you require. Discover what you are able to pursue in your quest to make the changes in your life that will improve not only the new changes to your career but also the improvements for your family as a whole.
As always, I look forward to your comments, calls and questions.
It is always advantageous to educate yourself on your financial position. It is not important whether you are quickly going to make a move or concentrate on other projects. However, it is important to know if your financial position will allow you to realize your objectives and, how those objectives will impact your life today and tomorrow.
Allow me and the team at Capital 360 to build secure, customized financing strategies that will allow you to realize the wants and needs in your life.
Wishing everyone a great week ahead,
Marco
