Episode 119: Will 25% of Canadian homeowners need to sell if rates continue to rise? No.

Are 1 in 4 or 25% of Canadians in a sell position if rates rise once more?

Many news outlets will have you believe this with the most clickbaity week of headlines I have ever seen.

This survey conducted by Manulife is in its 12th year of creating anxiety amongst Canadians.

So let’s look at the numbers more closely.

Here’s who they surveyed

• 2001 people
• Aged between 20-69
• Income more than $40,000/yr

Here’s what they found

• 1 in 5 Canadians Expect rising rates to have a significant negative impact on their overall financial situation
• 18% of the 2001 people surveyed believe they can no longer afford their own house. Is this where the 1 in 4 comment comes from? Or is the headline of the survey another finding that they didn’t include in the main bullet points? Confused! But if we’re rounding up that aggressively now… by 40% for a headline? That’s criminal
• 2/3rds believe that homeownership isn’t affordable (I mean, can you be vaguer?)
• Nearly half of those surveyed said they would struggle with unexpected expenses or are reconsidering summer travel plans due to affordability concerns.

The survey then goes on to say

“Among those surveyed, fewer than half feel prepared for rising interest rates (46%), inflation (42%), or housing prices (40%), which underscores how further increases in inflation, interest rates, and housing prices could be damaging for many Canadians.”

Who’s ever really “prepared” for unprecedented events that result in economic turmoil like this? Of course, you will get these answers if you ask objectively loaded questions.

So one quarter thinks they will have to sell their home if rates rise again. It’s 18% of the 2001 surveyed. In other words, 360 Canadians out of nearly 40 million people (almost 70% of which are homeowners) say they “believe” they can no longer afford the house they own.

But let’s make an important distinction between the sentiment of these people and reality. Homeowners will do whatever they can to keep their homes. Especially in markets like Toronto.

But here’s an even more critical statement from the press release:

“The survey revealed nearly one-third of Canadians admit they don’t understand how inflation or interest rates work, close to three in four do not have a written financial plan and almost half do not have a household budget, and that’s particularly telling when reviewing the results of this season’s Manulife Bank Debt Survey results,” said Lysa Fitzgerald, Vice President of Sales, Manulife Bank…”

So if I’m getting all this correct, all news outlets report that 25% of Canadians will have to sell if rates rise again.

Then we’re talking about 360 people, a third of which have admitted they have no idea how inflation or interest rates work. A further 75% of the respondents have zero financial plan, and 50% don’t have a household budget?

How can this possibly be taken seriously? Look, I’m not an expert in Random Sampling by any means but when it comes to real estate, it’s not the same as asking people “how do you feel about the current Prime Minister” There are too many variables in play and too many micro markets for any survey of this sort to be deemed reliable.

I call complete BS on this survey, and all media outlets perpetuating this anxiety-inducing nonsense should be thrown in jail!

How’s the market right now, and what does it all mean to you?

Can you tell I’m a little heated this morning? So much nonsense.

But hopefully, you understand that Canada, specifically Toronto, is made up of hundreds of micro-markets that respond very differently to economic turmoil.

We’re very focused on the demand side of things. Buyer sentiment we’ve been talking about week after week. Because of surveys like this making the rounds, many buyers are on the sidelines. But supply isn’t piling on with panic sellers looking to cash out and buy Government Bonds (who are offering some attractive rates right now btw)

Downtown condos are the only area where we see aggressive weekly increases in supply. But at  under 1900 units for sale, we’re well below the peak supply and best condo-buying opportunities that presented themselves back in Nov/December of 2020

Sell if you have to, but we’re encouraging anyone interested in selling to take a step back and look deeper into how their specific community is currently performing. You may be surprised and go to market or consider holding tight.

Buyers now’s your time to shine. Some great buying opportunities exist out there at the moment, especially if the home isn’t perfect.

The polished, premium product is still selling with many offers and for huge numbers at all price points. But when I say polished, I mean polished to the nines. Not your basic home dept off-the-shelf renovation.

Many rookie flippers and wannabe developers are now out of the market. Many borderline borrowers are now out of the market. But many serious buyers looking for their next adventure are certainly in the market. And they’re making big offers when the right home crosses their path.

Please don’t be afraid to be in the market now. Down the road, you know you can’t daytrade real estate, so make a move when the time is right and don’t let the “news story of the day” influence your decision to buy or sell.

The rental market is robust, and investors buying today are in an excellent position for serious annual ROI—even cash flowing sometimes.

I was just on the phone with an investor client as I type this who’s now aggressively looking for homes to build. Now that all the rookie investors are out of the way, he’s got a clean shot at getting land value properties at a steal compared to Q1 of this year.

I sold a lot on Allen Ave for $1,150,000. Firm offer within 24hrs of calling around the broker community. Sight unseen. Land value only; the interior can’t be accessed.

So the market makers are seeing loads of value out there right now, and if you’re a buyer, I hope you do too. But don’t get it twisted; there are discounts across the board. Some houses and condos are still trading at record-high prices.

That’s all for now, see you next week 🙂

Have a wonderful day, and don’t forget to share this. We have over 42,000 subscribers, and the list keeps growing. Thank you for that!

Don’t forget to follow us on Instagram and Facebook. We post some real-time stats on our channels you don’t want to miss. You can also catch up on my 2022 real estate forecast post here.

And, please find me on Twitter as I’ve been more active there these days.

That’s all for today; thanks so much for your energy and attention. If you want some clarity on the market and your specific situation, please DM, comment below or email Ara@thespringteam.ca.

Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,730,136
House Median Price: $1,467,500
598 Active Listings
62 Firm Sales This Week
Months of Inventory (MoI) ~ 1.74
Average Days on Market ~ 9.14 DoM

Condo Average Price: $808,107
Condo Median Price: $750,000
1848 Active Listings
116 Firm Sales This Week
MoI ~ 2.06
Average Days on Market (DOM) ~ 16.17

Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,817,301
House Median Price: $2,544,918
145 Active Listings
13 Firm Sales This Week
Months of Inventory (MoI) ~ 2.24
Average Days on Market ~ 10.30 DoM

Condo Average Price: $959,250
Condo Median Price: $835,500
213 Active Listings
12 Firm Sales This Week
MoI ~ 2.36
Average Days on Market ~ 25.67

Leaside, Davisville, Yonge & Eglinton
House Average Price: $2,292,127
House Median Price: $2,350,000
56 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 1.30
Average Days on Market ~ 5 DoM

Condo Average Price: $858,077
Condo Median Price: $769,000
167 Active Listings
13 Firm Sales This Week
MoI ~ 2.20
Average Days on Market ~ 17.92 DoM

Birch Cliff
House Average Price: $1,593,400
House Median Price: $1,975,000
28 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 1.38
Average Days on Market ~ 7.4 DoM

Kingston Rd Corridor to Highland Creek
House Average Price: $1,001,667
House Median Price: $960,000
88 Active Listings
3 Firm Sales This Week
Months of Inventory (MoI) ~ 1.33
Average Days on Market ~ 3.333 DoM

Condo Average Price: $876,000
Condo Median Price: $875,000
55 Active Listings
5 Firm Sales This Week
MoI ~ 1.82
Average Days on Market ~ 14 DoM

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