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Mortgage 101 – are house prices going up or down? | November 2022 Part 6

In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on CityNews 95.7 and CityNews 101.1, the guys talk to realtor James Dwyer and the three discuss the hot question: are house prices going up or down? Find out, along with the situation with new construction homes, mortgage rate increases, housing demand in Nova Scotia and Ontario, and so much more.

Mortgage 101 with Clinton Wilkins & Todd Veinotte: Are house prices going up or down?

Don’t feel like watching the video? Check out the transcript below.


Realtor James Dwyer is here to talk about the Halifax Market

Clinton Wilkins: [00:00:00:01] We have James Dwyer from Engel & Völkers here in Halifax, and we have James on the line. James, are you with us?

James Dwyer: [00:00:06:08] Yes, I am. Good day, gentlemen.

Todd Veinotte: [00:00:07:28] Good day. Good day. James, what’s it like out there? What’s the market been in Halifax? Has it been a pretty hot fall market?

James Dwyer: [00:00:16:00] Uh, well, no, the activity is down quite a bit in comparison to last year. So, you know, they were down about 37.5 per cent in volume. But the interesting thing is that median sale price has gone up for the second month in a row after the drop from the peak.

Are house prices going up or down?

So the lowest point we’ve reached was a median sale price of $430,000 we’re now sitting at $460,000. Got a couple of theories on that actually, with interest rates increasing rapidly, it’s creating a bit of a shock to the system and thus in turn, same thing on the seller side.

If they feel that the buyer confidence isn’t there, then they’re not listing. So what we’re seeing right now is that buyer activity is outperforming the listing side again. And I suspect that with a lot of buyers, it’s a situation where, you know, the desire to own a home and move forward with things is starting to drive that a little bit, considering that a lot of buyers kind of took the summer off after the first initial rate hike.

What is the demand for real estate like right now?

Clinton Wilkins: [00:01:17:19] Yeah, I think for at least what we’re seeing here on the mortgage side, James, that some people were really fatigued, I think from the last two years. As you know, so many properties, there were 20 plus offers and I think that was kind of disheartening.

What we’re seeing here is agreements are actually starting to come together and I think you kind of hit on it. There’s not as many transactions, but there are successful transactions happening. And it seems to us that we’re seeing, I don’t know if prices are down per say, but prices seem to not be going, as you know, over the list price. I think things are getting listed more at a realistic price or something. I don’t know, but can you speak to that a little bit?

What are the list prices like right now?

James Dwyer: [00:01:56:23] Yeah, I think it’s the evolution of the psyche of the buyer, right? So after going through a period of time where, you know, we’ve got very demotivating to constantly be losing and seeing how they sell at such high prices over the ask, you know, they’re now into a position where, you know, yes, they’re more conscious of things and it’s more realistic at the list prices

And, you know, they’re much more reserved, I guess, in the thought process of going over. But like I said, you know, with not enough inventory there, it’s definitely having a positive impact on home sellers right now for sure.

Todd Veinotte: [00:02:31:03] What can you tell us about new construction, James?

James Dwyer: [00:02:34:16] New construction seems to be chugging along well. We’re waiting on some data points to come out from here in Nova Scotia. But across the country, especially in Toronto, which is the ground zero, if you will, is from some heavy, heavy data for sure, but nothing at the local level just.

What’s the new construction home demand like?

Todd Veinotte: [00:02:55:10] I would think, though, sorry to interrupt you, James, but I would think that with the supply chains and the issues with costs and inflation and all of that, I would just think that for some people a new home construction would not be the best option right now, depending on the flexibility of their budget. What can you tell us about that?

James Dwyer: [00:03:14:24] Yeah. Yeah, we’ve actually seen a couple of builders locally start to kind of do some teaser pricing or bring down their pricing to kind of reflect the market. But at the end of the day, to what’s really hurting them on their side is cost construction is still not quite in line with things. And, you know, and that’s and that’s becoming a big challenge for them.

Clinton Wilkins: [00:03:37:25] And what we’re seeing is people have entered into some of these agreements six months ago, a year ago, a year and a half ago, two years ago. And now with the way that the mortgage rates have increased there, maybe not qualifying again with most consumers, they need to get their rates at 120 days before closing.

New construction is slowing down?

Are you seeing some buyers back out of their agreements that they entered into, you know, months or a year plus ago? You know, either due to financing or due to other economic challenges like inflation?

James Dwyer: [00:04:07:00] Not on my side of things. You know, within the industry, we do see a little bit of it, but it’s not what I would say, you know, headline worthy, if you will. The data, you know, it’s pretty in line right now with that. Of course, we do see a little bit of it, but not a substantial side.

I think the more important thing that came out yesterday was with permits from across the country. Like, people, builders applying for permits. And I think they’re down 17.5% for building permits across the country right now. So that’s definitely tells you that the new construction side of things, things are slowing.

Clinton Wilkins: [00:04:41:22] Yeah. That doesn’t surprise me at all. You know, I think the one challenge here in Halifax and in Nova Scotia is we still have more demand for housing than we do supply.

In Ontario, in some markets, you know, they’re down 10, 20, 30, 40% in terms of price, not even transaction. Obviously, we know the transactions are down, but the prices have certainly softened.

I don’t think we’re seeing that here. I think primarily we’ve had a very conservative market historically, one, two, three per cent price growth. Now, obviously, we know the last couple of years there’s been more growth due to the demand in the market, obviously, since COVID.

And I think maybe we’re getting into more of this balanced market, but there’s still, you know, an opportunity to have much more supply come online to kind of like appease that demand.

Are people selling their homes because of financial hardships?

James Dwyer: [00:05:26:00] I think you’re right on that. It’s you know, I was trying to look at it from a selling perspective and say, you know, who’s going to be kind of leading that charge into 2023 to sell homes. Right?

And obviously, with, you know, if anyone’s kind of locked in at a really good interest rate about, say, over two or three years, I mean, they’re not going anywhere. I mean why would you want to sell that and leave that kind of great little interest rate that you’re locked in for a period of time? But, you know, anything free to that?

You know, at the end of the day, I mean, you look at, say, January 2019 when the median sale price was $282,000 and now today we’re at $460,000. I mean, that’s still a substantial growth.

Clinton Wilkins: [00:06:05:02] It’s significant.

James Dwyer: [00:06:07:09] Although the market has dropped, it’s still a net positive for anyone who’s bought a home prior to that.

What’s happening with mortgage renewals?

Clinton Wilkins: [00:06:12:26] Yeah, I think so. And James, I was interviewed by BNN Bloomberg in November about clients that their mortgages are coming up for renewal, not so much in our province, but there were comments from professionals across this country that there may be more homes coming up for sale because clients are renewing and when their renewals are coming up, the rates are much higher today than they were, you know, five years ago, four years ago, three years ago, two years ago, even six months ago. So have you had any rumblings from clients that are listing that they’re listing their homes due to some financial hardship?

James Dwyer: [00:06:50:10] We are definitely seeing that in the marketplace. We’ve seen it a couple of times, especially anyone who’s in that position. So you kind of backtrack the time frame on when they bought the house. We do see it in the market right now, but I don’t think it’s kind of had a big effect here yet. It’s definitely coming because some of these renewals are quite substantial.

And you have to ask yourself, I mean, you know, if you know, I don’t know too many homeowners that would have that kind of disposable income to offset that. So it’s just easier for them to get out from underneath it. But it’s definitely on the horizon, and I think we’re going to see an uptick of that in the spring. I think we’re going to see an uptick in duplexes, triplexes and as well Airbnbs.

Clinton Wilkins: [00:07:34:17] I think just obviously with Nova Scotia, we know and I and obviously in Ontario and across the country, many provinces have limited the amount that rents can be increased. So I think we’re certainly landlords and small landlords have been impacted by that because their costs are higher, but they have nowhere to collect more income.

We have about a minute left, James, and I just want to kind of give you the last word. As we know, it’s financial literacy month in many households, the home is the biggest asset, but there’s all kinds of different real estate that people can invest in to increase their net worth. We’ll give you the final word. What financial literacy month in terms of increasing your asset, what is your best advice to clients?

Last advice for buyers and homeowners going into 2023

James Dwyer: [00:08:13:08] Well, I mean, I think going into 2023, we just you know, I think a lot of people have to be a bit more reserved in their approach on things. Ultimately, you know, having flexibility in the budget and be positive with cash flow, it’s going to be very important coming into the next year or two.

And so when it comes to say on the purchasing side, you know, even though you may be, you know, preapproved at a higher price point, make sure that what you’re purchasing is a good reflection of the budget.

Just because you can afford a higher or more expensive home does not necessarily mean that’s a positive thing, especially if we have any bit of a downturn that’s coming. So I would say just be very cautious. Have the research done, especially if you’re planning on purchasing, make sure that that list price is the correct price. And if you do have the offer over that, make sure it’s in line with the market.

You know, at the end of the day, you can’t fall in love with any house, especially in that type of a market, because, you know, it’s got to make sense. Got to make sense of the budget, make sense in the black and white and just be, you know, just be very persistent.

Todd Veinotte: [00:09:18:18] James, I hate to interrupt you, but we’re going to wrap it up. Thanks so much. Appreciate your insight as always, pal.

James Dwyer: [00:09:23:11] All right. Take care guys.

Todd Veinotte: [00:09:23:29] Okay. That’s James Dwyer. We’ll be right back.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.


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