26 Oct Market Notes: strong demand for housing downtown
I am continuing to see very strong demand for housing downtown, as a lack of inventory continues to keep the market competitive.
The most competitive properties continue to be nicely finished homes that need very little maintenance. This type of home coincides well with condo dwellers cashing in on the equity built up in their condo to move into a house. A house with a basement suite to help supplement the mortgage is becoming more and more valued and one of the most frequent requests I receive.
Where I am seeing value is in properties that need work or are in overlooked neighbourhoods. The smart money is unlocking potential in character homes and recognizing development trends happening in certain areas of town.
The big news in real estate this week was the hike in mortgage rates. Historically, choosing a variable rate mortgage has been the best choice, but in today’s rising rate environment there is more uncertainty. There are also differing opinions on the topic and if we have learned anything from stock market sell-off over the last couple weeks, it’s that we are living in uncertain times.
Here is the best advice I’ve read recently on Fixed vs. Variable via the Globe and Mail:
Here’s the key to maximizing success in a variable. You must be well qualified, and you must shop rates aggressively. Settling for an average rate can be the difference between winning or losing in any rate you pick. “The bigger the rate discount [on a five-year fixed] the lower the probability” of saving more interest in a variable, Mr. Milevsky says.
Apart from that, deciding on whether to float your rate depends heavily on three things, Mr. Milevsky concludes:
- Are you renewing a mortgage or getting a new mortgage for the first time? (Mortgage experience matters, and the former can usually handle more risk.)
- How much equity do you have? (If you’re highly leveraged with just 5 per cent to 10 per cent down, and “every dollar counts,” fixed is usually wiser.)
- Do you have salary stability? (High unemployment risk, variable income, self-employment and/or income linked to real estate are all reasons to consider locking in, he says.)
Picking a mortgage term is like investing: there are no guarantees. Variable rates are ultimately a risk-return trade-off, Mr. Milevsky says, and every borrower must remember that going in. In the long run you’ll save more in a variable … unless perhaps you were lucky enough to lock in last year.
-Nick, Oct. 26/2018
Feel free to contact me for more specific advice on buying or selling downtown.
Nick@livingdifferent.ca – cell/text – 416-890-6126