Last weekend, I attended Theta Trading’s options course; It was fantastic. For a real estate guy, I dove deeply into stock market data + trend lines. I am grateful for this new skill and the many investors that I connected with over those days.
However, with the coronavirus wreaking wider havoc on the market and the OPEC oil dispute further puzzling Ticker Trackers, I am happy to mostly have real estate holdings! Many are seeing their stock portfolios challenged in these last weeks, while the real estate market seems like a steadier bet for the foreseeable future.
We know from the data we are seeing that the housing market is very HOT! There was already a short supply of residential listings but now we also have some encouraging news for buyers and those with upcoming listings.
- The Bank of Canada has decreased the benchmark overnight rate by 0.5%, and variable mortgage rates (and most HELOC rates) have dropped in turn.
- Bond rates have been lowered and so will fixed mortgage rates (likely.)
- The stress test has been changed, and on April 6th the mortgage amount a borrower will qualify for may increase. This means more buyers competing, and at higher price points.
- If you’re holding real estate investments that you are considering selling, this may be the time. With increased buying power we are poised to see a market similar to 2016/17. ++ Reminder: Soon after this peak in spring 2017 the government implemented measures (Stress Test) to cool things off again.
- This may be a good time to consider refinancing a mortgage to lower rates or capitalize on the lower rate through a Home Equity Line of Credit (HELOC.)
- This kind of competition in the market will put pressure on Buyers. In tight, fast moving markets you may be wading into chaotic, multiple bid situations. This is where having a confident, knowledgeable agent on your team is so important.
- If you are tired of taking a beating in the stock market, there are plenty of opportunities to secure great returns in real estate; Either by investing in rental real estate as a co-venture or by lending private funds secured on rental properties.
We are very optimistic that the spring real estate market is going to create a lot of positives. We are also hopeful that the current stock market woes won’t last too long before rebounding.
With all of that in mind, and when listening + reading the various news outlets please remember: No one can tell the future. In these complicated times, make the best decisions you can and play the long game.