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Save Thousands in Interest by Refinancing Your Mortgage During COVID-19

What does COVID-19 have to do with interest rates?

Despite the substantial negative impact of COVID-19 across many industries, the virus has had a positive impact on mortgages, specifically for people getting a new mortgage today and for people that were in an existing variable rate mortgage. In general, when bad things are happening around the world, this tends to push interest rates down. Events such as 9/11, the credit crisis of 2008, Brexit and COVID-19 are all examples of situations in which interest rates subsequently fell 1% or more over a short period of time.

During trying times, money usually will flock to safety. Canada is a safe country to park money, and bonds are a safe asset class. Fixed mortgage rates are tied to bond yields, which means when bonds fall, fixed rates fall… CLICK HERE for the complete article

The Greater Vancouver Condo Market Should Prepare for Volatility

The Greater Vancouver Condo market is experiencing another stagnation period in price movement. Over the past three months prices have remained within a three thousand dollar bracket. Current prices are retesting the higher echelon of the middle threshold in the current market cycle. The average sales price is down 9% from the peak, signalling there is plenty of room to drop. Eitel Insights forecasts that during 2022 prices will have dropped nearly 30% from the peak experienced during 2018.

Prices have remained in another very tight range similar to the previous tight cluster of prices during 2019. The previous cluster sent prices higher pre pandemic. What is different this time is the Inventory is on the rise and growing much faster than the sales. Once the buyers eventually learn that they are in the driver’s seat, prices will begin to drop with gusto.

New listings grew at the highest pace since 2010 for the condo market, with over 2900 brand new active listings. Which is roughly 750 more new listings than the average over the previous 5 July data points. The sales did grow no denying that, but only by 159 sales from July 2019. Also over the previous 5 year average the July sales were actually down over 250. Seems like there is more of a need to sell than a demand to buy. The last two months of newly listed properties equals over 5700 new listings, the highest two month span in a decade.

With the abundance of new listings, the overall inventory grew by another 600 compared to June’s inventory. While sales did rise, not enough to mitigate the growing need to sell. Inventory numbers have risen to the 2nd highest peak in the past 5 years, with over 5600 active listings. Still to come is monstrous amounts inventory to be introduced to the market from the presales. Worth mentioning is the end to the evictions ban will likely be occurring in September. While the CERB is also seemingly coming to an end, and those whose are still without work who qualify for EI will be getting less money and some simply will not qualify. None of this bodes well for the demand sector of the Condo market.

The notion offered by some perennial bullish market watchers that due to the higher sales numbers in July, the Covid-19 effect has been nullified is erroneous. Yes sales have increased, but ever stop to wonder why? One answer is prices are down 9% and the price per square foot continues to drop signalling properties are selling for less money. Secondly those who had been pre-approved, pre Covid have followed through with those rate holds. There is usually a 90 -120 day prequalification rate hold. The idea that someone would purchase a home before they are about to lose their job is seemingly farfetched, but in this ever indebted society that is exactly what has been occurring. The 1404 sales which occurred in July, hold a distinct possibility that some of those new owners would not have qualified for that mortgage if they applied today. Those CERB payments helped greatly with the first mortgage payment but what happens to that owner once the free money era comes to an end. As stated the last two months had over 5700 newly listed properties, while the sales have achieved just over 2400. The trend is in the buyer’s favour.

Business’ that have been on hold are eager to get back to work, the challenge that most business are experiencing is, the market isn’t as eager to purchase as they are to sell. This will result in staff returning to work, only to be let go in short order. The economic impact of the first shut down is still in its infancy, imagine a second shutdown and the long term effects that would hold. Even if there is no second shut down the economic landscape will remain changed. With personal job, wealth, and health uncertainties not to mention those in your family who you may need your help. The idea of buying another expensive pair of shoes or a new watch, just because, are days gone by for most.

The market has been artificially propped up with free money, once that comes to an end, taxes will inevitably be raised to refill the governments desolate coffers, the full impact of Covid will be felt. With a glut of inventory and a lack of potential renters and purchasers, the roll out of this recession is well underway. Ultimately resulting in assets being sold, primarily secondary condo properties.

In summary, Eitel Insights cannot wait to offer a positive outlook for the Greater Vancouver Condo market, but the analytics of the current data projected into the future is not positive, we believe it is our obligation to offer actionable intelligence through analytical interpretation not pie in the sky optimism.

Dane Eitel, Eitel Insights

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Toronto Real Estate Joins The Flight To The Suburbs, As Inventory Rises In The City

Greater Toronto real estate is seeing a big jump in sales, and it’s mostly people fleeing to the burbs. Toronto Regional Real Estate Board (TRREB) data shows it was the most sales for July in at least a decade. The increase in sales was primarily driven by a surge in the 905, where inventory is falling behind demand. The City on the other hand, is seeing new listings grow at three times the pace of sales.

Greater Toronto’ Real Estate Prices Make Abrupt Jump

The price of a typical home, all types included, made an usually large increase during the pandemic. The TRREB benchmark price reached $880,400 in July, up 10.01% from the same month last year. The City of Toronto reached $967,900, up 9.06% over the same period. This isn’t just unusual during a pandemic, it’s an unusual trend for the history of Toronto real estate prices….CLICK for complete article

Toronto Real Estate Prices Creating a Double Top?

Greater Toronto Area Market Update

The Greater Toronto market has experienced a prolonged uptrend which has propelled prices up 127% since 2010. The aggregate average sales price had initially peaked in 2017 at $920K (125% Growth over 7 years), with June 2020 recording a $930K price. These two data points are seemingly creating a double top for the GTA real estate prices.

The first break in the armour was the rapid uptrend (green line) established in 2016, which rose prices over $290,000 in a year and a four months. That uptrend broke in 2017. The rapid uptrend was not sustainable growth rate, prices subsequently retreated back to our forecasted higher echelon of the lower threshold $750K during the end of 2017 and into 2018.

Eitel Insights analytics is noticing a double top is forming in the GTA prices. After the creation of the first peak in 2017 with current prices representing the second peak. After peaks comes valleys, the GTA has remained in an impressive uptrend since the market took a temporary pause in 08-09. That uptrend (black line) is about to encounter a serious test which will cause market volatility.

Prices will begin to search for their market cycle lows, just like every other market cycle previous. The chart has identified a few pricing thresholds that will be tested in the upcoming months and likely years. Eitel Insights anticipates the market bottom to occur and create a channel which the market will remain likely until 2025.

With a double top forming in the price chart, we next take a look at the supply demand factors. Inventory has seen the bottom during December 2016 with only 4700 active properties. The most recent bottom came during 2019 with over 7400 active listings. Still well below the 15 year average of 17,800 actives, but a higher low none the less. Equally as important, the data is officially breaking the downtrend that had been in play since 2013 signalling that trend has completely come to its end. Going forward we anticipate inventory to continue in an uptrend meaning with higher lows and higher highs in the reported data.

The magical number of 21,000 active listings which hasn’t been broken in the past 7 years, will eventually relent in the upcoming several quarters. Inventory had been getting sold in record time and record money in years previous, this in turn has kept the inventory a nominal levels, while increasing the asking price.

The sales chart demonstrates there has been less demand at current prices, a trend which has been developing seemingly unnoticed by most. Sales are not low in 2020 solely due to Covid-19. No, they have been trending lower since 2016. In fact sales have not remained above 10,000 since 2016. June 2016 had over 10,000 sales and the month ended with 12,000 inventory. Since then inventory levels have surpassed 19,000 each summer with ease, however the sales have not risen above 10,000 since, with one data point being the exception during 2017. That signals to Eitel Insights, increasing demand to sell with decreasing demand to buy.

Demand has waned. Up next anticipate an increase to the supply without nearly the amount of a buyer as years previous. This upcoming reality inevitably creates competition amongst sellers, which in turn, leads to lower asking prices. As with any cycle, the overheated frenzied activity eventually ends, and gives way to a whole new kind of chaos on the other end of the spectrum.

The condo market in particular will see a chaotic atmosphere, as newly completed properties begin to enter the GTA market in 2021 and predominantly in 2022. The flood of inventory that is on the horizon is eerie enough, throw in the investor market that hasn’t received rent since Covid-19 hit and cannot evict the tenant going through the proper channels until who knows when. Once the investors do get their properties back, selling will be on the mind. Unfortunately this example will occur by the hundreds, and the market will flood with new and older inventory.

The historical chart is calling for a similar market cycle to the one that occurred from 1989-2002. After a 4 year uptrend prices shot up 167% to reach the all-time high of $261K in April 1989. After peaking the search began for the market cycle bottom, which occurred multiple times throughout the 11 year price channel.

Eitel Insights is not calling for an 11 year channel, however we are stating that the market cycle began in 2017. 3 years later and the current data is simply confirming the previous high, as time marches on prices will begin to work their way lower and find that market bottom. We are forecasting a 24% correction, indicating prices will test the $700K threshold in the upcoming years. The bottom will likely occur in 2022, once the inventory has flooded the GTA.

Not all markets in Canada are created equal, some areas are closer to the bottom. While others still have significant percentage losses upcoming. Become an Eitel Insights client to find out which are which.

Dane Eitel, Eitel Insights

 

Facts vs Fools Gold – Greater Vancouver Condo Market Update

Condo sales prices were higher in June compared to May and the year previous, similarly sales were higher than the previous month and year as well. However to say that the Condo market is forecasted to go higher and that there is pent up demand, is simply a fallacy. There will always be a need to buy and sell, currently that is the case there… some demand and a lower demand than previous years. As prices continue to trend lower beyond the 10% current drop there will continue be sales. The market will never flat line, but remember just because the Greater Vancouver Condo market has a pulse, doesn’t mean it is out of critical condition.

In reality with how the current market sits, it is very hard to be positive about the Greater Vancouver Condo market, yet some still are. We explain why we are not and you shouldn’t be either.

Prices as mentioned were higher in June with the average price finishing at $679,294 albeit a measly 1 thousand dollars from May’s sales price of $678,495. Hard to get excited about those numbers. Especially since June was the month when the supposed pent up demand was expected to be released, after being housebound for 2 months. Prices are still down over 10% from the market peak in 2018. The pent up demand is a whisper in the wind compared to the rising pent up need to sell.

As the market progresses to feel the effects of the Covid-19 the mortgage deferrals will eventually come to an end. The tenants that haven’t paid will be asked to leave. Not to mention all the presold properties that will flood the market as the completions continue which a whole beast on its own. The inventory has no choice but to skyrocket.

Another sign of a faltering market is prices remaining steady while the price per square foot falls.

The price per square foot has fallen from the peak in April 2018 when condos were selling for $847 on average, to currently selling at $767 PPSQFT. The month over month drop was $34 per foot, the largest drop since 2018. The per square foot prices has fallen back to the upper edge of the downtrend.

This is signalling larger properties are selling for less money. With the average price remaining steady and the PPSQFT dropping results in a negative forecast for the condo market. Once higher valued properties sell at discount there will be less willing purchasers at the lowered valued properties as they begin to perceive the market is headed lower.

While we anticipate the Condo average price dropping around 30%, while we anticipate a 19-24% drop in the price per square foot chart. As the newly completed units become for sale or resale, the buyers will want new properties with warranties as the insurance issue continues. As a result elder buildings with higher square footage will sit on the sidelines until they drastically reduce their prices.

Inventory has finally broken out of the prolonged downtrend that propelled the inventory lower since 2012. During 2019 the inventory had temporarily surpassed the downtrend only to relent and retreat back into the comfort of a long term trend. Going forward we anticipate the downtrend to be broken for good, as inventory works its way back up to 5900 active listings, the near term high achieved in 2019.

With inventory surpassing 5000 for the first time since September 2019. Market prices are undoubtedly headed into the buyers favour as inventory continues to rise in 2021 and 2022.

There were over 2800 newly listed Condos in June the highest single monthly total since May 2012. Which elicits our point of pent up need to sell being more prevalent than any supposed pent up demand to buy let alone, invest. Furthermore the inventory rose over 1000 from new listing in May as the rise in Sales only ticked up 451 during the same time frame. The data is indicating a doubling of the inventory rise to that of sales.

As stated the Sales for the Greater Vancouver Condo market did rise to over 1000 sales in June, a significant rise from 655 in May. The numbers are better but far from glorious. The sales were the 2nd worst June on the chart which goes back 15 years. The chart depicts the sales data squarely in the middle of both the downtrend and the low sales channel.

Not all markets in Greater Vancouver are created equal, some areas are closer to the bottom. While others still have significant percentage losses upcoming. Become an Eitel Insights client to find out which are which.

Dane Eitel, Eitel Insights

Watch Eitel’s latest video here:

Exciting New Tools for Real Estate Investors, Owners and Industry Professionals

Real estate investing has been one of the core topics of Michael Campbell’s MoneyTalks since it’s inception. Whether on our syndicated radio show, Global TV, our daily updated website, our subscription services or the annual World Outlook Financial Conference – we understand the importance of good real estate market insights and recommendations, and the critical role of real estate in the financial health of most Canadians.

That’s why we are very excited to introduce a brand new set of research tools for real estate investors, owners and industry professionals that takes analysis to a whole new level. A new style of forecast that produces actionable, real-time intelligence to help you decide WHEN to make that crucial buy, hold or sell decision. And perhaps more importantly, helps you identify WHERE those opportunities exist.

Dane Eitel of Eitel Insights first started contributing his unique market analysis to www.mikesmoneytalks.ca over a year ago. In very short order his posts became among the most-read and most-shared content on our site. In January of 2020 he became a contributor to Michael’s Inside Edge Subscription Service and is now one of it’s best reviewed contributors.

So what is so special about his research?

Dane has brought some of the most sophisticated technical, statistical and charting tools – which have been successfully employed in the stocks market for over a century – to the wealth of raw data generated by Canada’s real estate boards. The resulting analysis moves beyond simple ups and downs, comparables and stand-alone numbers. It provides real, clearly defined intelligence on market bottoms, tops and trends as it relates to price, inventory and sales – and then accurately forecasts the Relative Strength Index, Moving Averages and Supply & Demand for individual municipalities.

Bottom line?

Dane’s research has proven to be incredibly successful at predicting the best time to get in and get out of specific real estate markets. It has clearly identified price bottoms and tops. And it has proven accurate over a multi-year period.

Why is it available to you now?

Until now Dane’s work has only been available to his consulting clients, those who’ve hired him for specific projects or on a retainer basis. Since shortly after we first shared Dane’s work on MoneyTalks, we have been working with him to develop a platform that would be accessible by a wider audience of investors. That platform is now ready, and in Phase 1, has gone live with datasets and analysis for the entire Greater Vancouver region – 20 unique municipalities from Vancouver to Whistler to Tsawwassen to Pitt Meadows and everything in between. Dane provides monthly updates to all these cities, with regular new charts, new analysis and new insights for his subscribers. The research is available in it’s entirely – or for just a single market. You choose.

Special introductory offer

We have worked with Dane to make his research as attractive as possible for our audience. To that end, until August 31st, 2020 he has discounted his individual municipality reports by 50% – an incredible value for any investor or property owner with a specific target city and timeframe in mind. In addition, if you choose to become an on-going subscriber Dane has set up a special MoneyTalks-only discount code. Simply enter moneytalks when you are on the checkout page and get 25% off your annual subscription. These are both limited time offers so we encourage you to CLICK HERE to find out more.

How does this help you

If you are an real estate investor, have current real estate holdings, develop, market or advise on real estate in Greater Vancouver – these new technical tools will help you make better buys, sell at better times, establish better timelines and give you more confidence to execute on your strategy. We encourage you to learn more about Eitel Insights at his website – https://www.eitelinsights.com/. Dane’s direct contact information can be found there, and he welcomes your questions or requests for more information.

Thanks for giving us the opportunity to introduce this new and exciting analyst.

Grant Longhurst, President
MoneyTalks and HPC Inc.