I Help Realtors & Real Estate Investors WIN 💰 | Founder of Broker's Playbook | Partner at REC Canada | Founder of Playbook International Media Corp. | Prop-Tech Entrepreneur
Good morning to my wonderful community. I have been hit up likely hundreds of times in the last week, specifically since the government and the the Bank of Canada actually made their move and brought interest rates down by 25 basis points. And there has been an overwhelming response in my audience, in my little world of people asking for comment as to what I've seen. But I thought it was timely to just share my insight and of course some of the feedback from the investors we represent. And of course, share with you some of the data that we have as a firm that represents over 15,000 investors. I'm gonna start speaking to my brothers and sisters in the business. If you are a real estate or mortgage broker, you can confidently look at your clients that you give advice and simply share the fact that the road ahead looks rosier, a little bit clearer than the road behind us. What took place the last 2 1/2 years is very simple. It was the cost of the pandemic. It was actual policy to reverse the adverse effects. For whatever reason, we simply cannot have a country that prints money the way they did and not have a price to pay for it. This was our price to pay. Did it hurt? Yes, it did. Did it hurt our business? It decimated our business of real estate. For real estate investors. What does this mean? It means that cash flow across all of our properties, our portfolios, has been decimated in. For many of us, it's running red, negative cash flow. But is that the only reason that we invest in real estate? Is it cash? And the answer is no. Real estate still stands as the most stable asset class you could possibly invest it. So as investors, should we those who do have the luxury to maintain their portfolios, is it worth continuing to do so? And the answer is absolutely yes. As an investor, you have to ponder and consider things such as warehousing is going. In this case, we know that the housing supply in Canada is extremely constrained. As investors who own property, as investors who are looking to buy property, this is actually the best time you could possibly get yourself into the market because prices have never been this depressed. What does this all mean for the buyer and the seller to everyday Canadians? They have nothing to do with investment in real estate. What does this mean to you? Well, a 25 basis point rate cut translates to about $15 per $100,000 per month. So to put this into plain English, if you have a. $500,000 mortgage, your monthly payment just went down by $75 this month isn't enough to throw a party. The answer is no, but is it a step in the right direction? The answer is an overwhelming yes. My humble opinion, both personal and professional, is that by the end of this year we are going to see at least two or three more 25 basis point rate cuts. I believe by next time this year we're probably going to be at 150 to 200. Basis points below where we are today. So is there a quick and easy fix to the pain that we're feeling at these rates? I do not believe so. I think we need to continue to live the way we need to cut back on excess, to cut back on anything unnecessary, to make the next year to two years as painless as possible as we return to a more stable overall robust economy in the next couple of years, I hope. My opinion helps you gauge a little bit more about how to handle your own situation. The RBC Canada team has been doing this for 20 years and we've navigated at least four different bumps along the way since we have been in the market in 2006. The market has done ups and downs. It's sideways, but the trajectory has only been one way and I strongly and firmly believe that the best of the Canadian market is yet. To come, I do believe prices will appreciate over the next four years and I also believe that the interest rates will come down as they have very limited choice to create the opportunities and the economic climate we are. I hope this helps.