Your Top Real Estate Questions Answered

On this week’s REC Brunch we had the pleasure of being joined by Chris Slightham, co-owner of Royal LePage Signature. His family created the brokerage 55 years ago, with an in-depth understanding of the industry dating back further generations. His own personal expertise goes back 35 years, which greatly aids him in managing 1,200 of the country’s leading realtors. Many investors have pressing questions for him given the current state of the housing market with pandemic still in effect. Here is a recap of the questions asked to Mr. Slightham during our broadcast.

Why has the real estate industry continued to be successful during this time?

Food, water and shelter are all basic needs, real estate falls into this; therefore being an essential service. Deals were going through at every level of the pandemic, the business never skipped a day. They have had to put in new protocols to keep everyone safe to keep the steadiness, through heavy sanitization, limiting tours and having virtual tours. 

Will banks continue deferrals?

It’s more than likely they will. There is no financial incentive nor benefit of any kind to cause the market or individuals any financial issues. It’s actually in their best interest to continue deferrals. We will likely see them continue into 2021.

Will the lack of inventory drive values up? Some experts also believe that the annual rate increase of 6.7% will not continue.

These individuals are contemplating less value because they are anticipating less sales volume. There is a range of what the numbers could be, which are based on supply and demand. The market as well as construction has slowed, but that is only temporary. Benjamin Tal, CIBC’s Chief Economist, believes the industry will adjust to normalcy by the end of the year based on how we see the market moving now.

When should someone put a property on the market?

Assess the numbers of the micro market you are in, look at the sales prices, and the weeks on market. Understanding these factors when selling your property will give you security, when you have clear understanding is when you get involved. The lower the inventory, the higher pressure on sales prices; the higher the inventory, the less pressure on sales. 

Should an investor buy during COVID?

You need to evaluate your goals and what you want to achieve, you should always look at real estate from a long-term point of view. In the GTA, 5 year fixed mortgages are currently at 2%. Low interest rates are very appealing, but you also have to be financially comfortable with dips and peaks in the market within the next 6 - 18 months. The waiting game is exceptionally advantageous. If you can make cash flow work for you it’s ideal. 

Could real estate get cheaper? Yes, but the key isn’t timing the market, it’s time in the market. Attempting to time it is how you lose money. Just look at the numbers over time and you’ll see the values increase.

How is the rental market in downtown Toronto? Short-term rentals becoming long-term rentals has impacted the supply and demand.

Short-terms rentals have stopped for the time being, as having people come in and out constantly can be problematic. Rentals took an approximate 10% decline in prices. But real estate investing is about the long game. If you can stomach the wait, you will definitely be okay in terms of the value. Calm waters are inevitably ahead. This is just part of the process, something that won’t bother you in the long-term.

It’s speculated that the rise in remote work will result in more movement to cottages and less expensive areas (out of the GTA)?

That’s still up in the air as we are not so sure how sustainable the method of working away from the office will remain. Productivity can be tricky to maintain when everyone is separated. There will inevitably be more people moving from the GTA and working from home, but this having a huge impact is very unlikely.

Will the shortage of development of land in the GTA ever catch up for the need we have for housing?

There is the possibility we will see that here, but not in our lifetime or the next few. Density will just continue but we will look more and more like Manhattan. Toronto will be more liveable than New York because we simply have more space to expand. We are still building low rises, demonstrating we still have decades of density to utilize. 

What should people know about real estate investing?

Patience is critical. Always be prepared for the long term. You only lose money in real estate when you have to sell. Slow and steady always wins in the end. If you see big dips and falls, it’s not as secure of an investment.

We will be posting the REC Brunch every Sunday on our YouTube channel. Click the link to view all of our past content.