Bruce Cram - Real Estate

04/01/2024

April Fools!

12/23/2023

Is a fixed interest rate better than a variable right now?

For the last decade, those homeowners who chose a variable interest rate on their mortgage had an advantage over those who chose fixed.

Recently this has changed.

For those who are either considering to buy or have a renewal coming soon, deciding between a fixed or variable rate seems to be a choice between two evils.

Fixed mortgages are tied to the 5 year bond yield.

Last week, after the chairman of the US Federal Reserve, announced his interest rate plan for the next 3 years, the Canadian 5 year bond yield fell.

In Canada we're now seeing fixed interest rates lower than we’ve seen in 2 years.

The advantage of a fixed rate is that you can set your budget for a period of time.

Regardless of what happens in the economy or around the world, you will have predictability in your payment.

An attractive feature of the variable rate, with most banks, is that you can convert it to a fixed rate at any time.

Currently the variable rate is higher than the fixed rate. Expectations are that in 2024 the Bank of Canada will lower their overnight lending rate by 0.75% to 1%.

This will likely keep the variable rate higher than the available fixed rates in 2024.

Nobody can predict what will happen for sure. If you feel the fixed interest rates will come down even more in the future, then to be able to convert your variable rate to a fixed rate may be appealing.

Do you prefer taking a risk of higher payments for 18 months so that you can lock in at a far lower rate in the future? Or is it better for you to be able to have payment certainty?

The answer may be different for everyone.

If you'd like to have a discussion to determine which interest rate strategy is best for your needs, send me a DM and let’s begin a conversation.

12/20/2023

With high interest rates, should the government reverse limiting mortgage qualification policies?

When interest rates were very low the government installed new policies to limit mortgage borrowing.

Policies like the Stress Test, for example, are supposed to ensure consumers could service higher interest rate debt.

At the time it was believed that each policy change was equal to about a 1% interest rate hike. These policies existed so that the BoC didn't have to raise interest rates.

Even before they begin to lower interest rates, since interest rates are now high, should the government peel back these policies sooner?

12/18/2023

The 3 essential steps to moving up to a larger home in Central Toronto in the next 3 months:

1- KNOW YOUR NUMBERS
Getting preapproved for a mortgage before you begin your search has always been the first step. If you have already begun your search but haven’t buttoned down your financing then you should stop looking until this step is completed.

We're in a high interest rate environ,ment. The cost of borrowing isn’t as cheap as it was only a few months ago and the mortgage stress test is still limiting.

One strategy could be to determine how much of your monthly income you want to spend on housing. Work backwards to determine how much financing this will carry. Speak to a professional.

You don’t have to be a numbers person. If you would like an introduction to the city’s best mortgage pro’s DM me for my list.

2- GET SPECIFIC WITH YOUR SEARCH CRITERIA
Since the shift in the market toward the buyer, houses listed for sale are taking longer to sell. This has resulted in lots of choice for buyers.

Previously, in the seller’s market, the suggestion was to be open to homes that didn't check off everything what you wanted.

With more inventory comes different challenges.

Be specific of your search criteria. You want to spend your time only seeing the houses that excite you.

3- SELL FIRST
This is a big element of a move up to a larger home than in the past. If you have a house to sell then you need to sell first. Homes are taking longer to sell.

There's still lots of buyers out looking. They’re being super selective over which houses are getting offers.

In order to get your home sold, you need to deliver tremendous value over your competition to the motivated buyers in today's market.

If you're looking for a market tested home selling system that gets results then download my C.R.A.M. Method guide. To get started see link in profile.

12/14/2023

When will interest rates fall and by how much?

The other day I read an article with an interview with Ben Tal, deputy chief economist at CIBC. He gave detailed reasoning as to why CIBC believes that interest rates in Canada will start to fall in May or June 2024.

Since I clicked on this article, Google has been sending me more articles from competing economists. Many of these same Canadian economists believe that high-interest rates are here to stay for the long term.

The truth is that nobody - not even Tiff Macklem, the governor of the Bank of Canada - knows exactly when rates will drop or by how much!

So if the person in charge of making the decisions over interest rate policy isn’t sure himself, it likely isn’t advisable to take too much stock in predictions others make.

What do you think interest rates will do in the next 12 months? Let me know in the comments.

12/12/2023

If you’re planning to sell in the next 6 months do this now!

Getting your house ready for the market can take time. After having lived in your space for as long as you have, no doubt you’ve accumulated ‘stuff’.

The very first activity to get your home market ready will be to declutter.

A decluttered home will show as being bigger and brighter than one that isn’t organized

Watch this short video for 3 strategies that can make decluttering easier.

12/11/2023

How skyrocketing interest rates are flipping the script on home buying.

Toronto's Housing Market is in Turmoil. I’m not telling you anything you haven’t heard already.

Recently, the Toronto Real Estate Board has seen a big increase in the number of houses waiting to be sold. In October, there was 4.5 months of inventory. This means that if there were no new listings it would take 4.5 months to sell off all current houses for sale.

The main reason houses aren't selling as fast as they did 2 years ago is because of higher interest rates ..
. but what does that mean?

When we look closely, we can see how these higher interest rates make it harder for people to afford houses.

Let's think about a house that costs $1,690,000. If you pay 20% of that price first, which is $338,000, you would still need to borrow $1,352,000.

In 2021, the interest rate was about 2.75%. To borrow this much, a household income of $205,000 was needed.

Now, because of new rules and interest rates, household income needs to be $340,000 a year to borrow the same amount. That's 66% more money than before!

With houses not selling quickly and it being the hardest time to afford a house in ten years, house prices are starting to go down.

Since their highest levels, prices have dropped 15% to 20% in Toronto, and they might drop even more in the first part of 2024.

Many people want to buy but are waiting to see what happens with the market. Until it gets easier to borrow money, inventory levels will continue to rise.

12/07/2023

Why is inventory in Toronto so high, prices so low and yet buyers aren’t buying these homes?

With the interest rates being what they are, it requires household income to be 70% higher than it was just over a year ago.

As a result qualified motivated buyers are still choosing to stay on the sidelines.

Check out this video to learn about a realtime example from one of the people I’m working with.

12/05/2023

Which selling strategies are working best right now?

All across Toronto inventory levels are up. Statistically, we are in what’s considered a buyer’s market.

A buyer’s market is defined as 'If no new listings hit the market, it would take more than 3 months to sell all existing inventory at the current rate of sales.'

At the end of October, Toronto is sitting with 4.2 months of inventory.

But being statistically in a buyer’s market doesn’t tell the whole story.

With interest rates being what they are, it takes almost 70% more income today to qualify for the same mortgage as 2 years ago.

So while we’re in a statistical buyer’s market, even if you're a motivated buyer it doesn’t mean you'll qualify for the mortgage that you want.

When selling your house it’s important to understand how buyers are feeling right now.

If you’re planning to put your house on the market in the next 2 or 4 months you can use any of a few different pricing strategies.

In a downward-trending market, overpricing your home to see how the market will react is a bad idea. An overpriced home won’t compare well to other aggressively priced homes and will spend longer on the market.

If you need a fast sale, the 'list low and hold an offer date' strategy is still working in some areas.

The challenge here is that a seller needs to be prepared to accept what the market is offering.

I‘ve seen sellers decline 4 offers and relist at a much higher price the next day. Certainly, it’s their house and they can offer it for sale at any price they want.

I believe that in multiple offers you will receive the most money the market will allow for your home in the present day.

Since the pandemic, Toronto has become a very micro-market city. What I mean is that strategies that work in one neighborhood may not work in another.

Before you choose a listing strategy, it’s important to understand what strategies are working in your specific neighborhood.

If you would like to have a conversation about what strategies may work best for you in the current market landscape, send me a DM and let’s have a conversation.

12/03/2023

We adopted a french bulldog.

We already have a dog. We certainly weren’t planning to have another.

We were dog sitters a few times for Millie for a weekend when he was quite young.

Often we were only supposed to watch him for a weekend but his owners would only pick him up after a week.

At his original owner’s house, he was often pinched by a young girl. Now, almost half a year later, Millie still barks at all young girls. This is a problem because Millie barks at my daughter and her friends.

Millie is fun to have around. He’s already super loyal and already very attached to my wife.

Welcome to the family Millie.

11/22/2022