Mortgage 101 – Busiest Time in Real Estate

Todd Veinotte and Clinton Wilkins discuss the upcoming spring real estate market, and highlight the shortage of listings in Halifax, attributing it to an influx of people and a lack of new housing and apartments.

Spring Market and Real Estate Trends

Todd Veinotte
Welcome back to Mortgage 101. Your guide to home ownership, with myself, Todd Veinotte and our mortgage guru, Clinton Wilkins. Clinton, do people say you are the mortgage guru when you’re out in?

Clinton Wilkins
I mean, there are a lot of billboards around there, and I’ve been on TV. We’ve been on the radio for years. I don’t know if they recognize the voice so much, but I think they kind of recognize the image. It’s Monday, if anybody’s curious, we’re recording this before the weekend, and I love the first of the week. I love the first of the month, and I love when the seasons change, I think it just gives you a fresh start.

Todd Veinotte
I would agree with that. And spring is literally around the corner. So spring market is, traditionally, and typically, the hottest market of the year.

Clinton Wilkins
The spring market is the busiest market for real estate. Why is that? It’s because the people have started to thaw out. They want to see, sometimes, what their home will look like with the grass growing, the flowers starting to pop up out of the ground. They want to see these types of things. And I think a lot of people can’t envision themselves moving when the weather is not good, and they don’t want to heat a house, they don’t want to shovel. But we have very short memories, as we forget. As soon as the spring hits, we’re just right in there. We’re starting to go to open houses and I can tell you, we have tons and tons and tons of pre approvals out there. So there’s certainly a lot of buyers out there. I think the one question Todd is, are we going to see more listings this spring than we have last year? Because I can tell you that the biggest challenge in Halifax is that there haven’t been enough listings.

Todd Veinotte
And that’s simply because we have an influx of people and not enough new houses being built. That is the reason, right?

Clinton Wilkins
That is the reason. And I think another part of the reason was there weren’t enough apartments. We need all styles of real estate, and we’ve said this before, the one good thing, there’s certainly a lot of apartments being built in Halifax that are not quite ready yet, but are becoming ready. So I think that’s going to be a shift. I feel it. And typically what happens is, with some of these resale homes, they buy bigger homes, but they’ll also sometimes sell and go into an apartment, just depending on what stage of life they’re in. So I think we’re gonna see a very positive uptick in the amount of listings. We certainly still need a lot of construction, but we have a concern over construction costs.

Todd Veinotte
I have a question for you – there’s a small community in Nova Scotia, in Lockport, and they just had a closure of a seafood plant, a lobster plant, and 100 plus jobs gone. I would think, and a lot of the people watching the news, and people we’ve talked to from that area, say they have to leave. They don’t want to leave, but they have to leave, and they own homes. What might that mean for the housing market? Who would buy those homes? Would be retirees, and people that could be retirees?

Market Trends and Prime Location

Clinton Wilkins
There was something kind of weird that happened during COVID. People were buying up real estate in every little nook and cranny all over Nova Scotia, if there was high-speed internet, because a lot of people live and work out of their homes, obviously you live in your home, but they work out of their home. One hot spot was New Glasgow, Nova Scotia. It was like one of the last places in Nova Scotia where you could buy a home, and you could buy a good home for like $200,000. I think the prices are maybe a little bit more now, but people were going and buying these homes, great access to the hospital, shopping and healthcare. New Glasgow is a nice little spot and great high speed internet. So, people were moving, young people were moving from Halifax, or all over the country, and moving to New Glasgow, Nova Scotia. It could be a very similar situation in Lockport. But typically, when we see a big employer pull out of a small community, the housing market takes a bit of a hit, but I think the demand in Nova Scotia is still just so high. I think it’s not gonna be 100 homes that are sold, but there could be 20 homes, for example, and those homes, I think there will still be enough demand in the community to eat that up.

Todd Veinotte
So, there’s always people who work in it, and that type of thing, and work from home and have burnout on business from home. That might be if the internet is what it should be, and we assume that it would be perhaps, an ideal location for some people.

Clinton Wilkins
Typically in more rural areas, in Nova Scotia, like Lockport is, the homes are not as expensive as they are in more urban areas. So typically, you can get a home at a lower cost, and that means that your monthly servicing of that is going to be less than if you’re in a different area. So that might be a good opportunity for some first time homebuyers.

Todd Veinotte
Absolutely, for sure. And like you said, if people are willing to live in rural areas, and it’s a nice way of life.

Clinton Wilkins
You and I grew up in rural Nova Scotia. I mean, you’re from New Brunswick. There are lots of rural areas.

Todd Veinotte
They are outside of St John, in a small little community outside of the city. So, yeah, I get it. I know what it’s like.

Market Activity and Mortgage Renewals

Clinton Wilkins
There are pros and cons, and I think that’s what you need to remember when you’re buying a home. It’s location, location, location. But can you make that location work? And how does the location weigh up against the servicing costs? Lower housing cost, but maybe it’s the higher cost of transportation. Maybe there are not as many employment opportunities, but it’s a lower cost of real estate. So that’s where you need to find the balance. And it’s hard for me as a mortgage professional to say: “Okay, you could afford to buy a home at $500,000, but should you buy a home at 300,000, but it’s an hour away.” There’s give and take.

Todd Veinotte
So overall, the market, like you were saying in Halifax, needs some new stock?

Clinton Wilkins
Certainly a huge need for more inventory. And I can tell you, we are way busier than last year. We’re doing 40% more transactions today than we were this time last year. That’s amazing. I think rates being down his helpful. A lot of noise in the media around what’s going on south of the border, in the US, the Bank of Canada rate decisions. And really what’s going on in the bond market. There’s a lot of pressure, and I think there’s a lot of pent up demand from last spring, where people might have got pre-approved, but at that point, the rates were in the fives, yeah, and now we’re in the fours. So that is more optimistic for people. The servicing cost is less. I can tell you right now, Todd, people are not as concerned about the rate, but they’re buying the payment. That’s what they’re most worried about right now.

Todd Veinotte
Well, I mean this ties back into variable versus fixed. We’ve had that conversation, and we can have it a little later in the show, but there was a lot of concern about a rate cliff with the renewal cliff. Rather, are we there yet? Has that happened? I think they’re happening.

Clinton Wilkins
I don’t think the cliff was as bad as was projected, because rates came down. I think if the rates were still in the 5% and 6% range, we would be in a harder shape. People can handle it. Their payments are going up. I met with a couple today and their mortgage is coming for renewal. They had a rate in the mid twos coming up, and now the rate’s gonna be in the mid fours. It’s costing $300 more a month. But they didn’t owe that much. They’ve only 10 years left on their amortization. They can handle $300 more a month. They’re making significantly more than they were five years ago. They both have received raises, and they’re like, 300, we can deal with this. This is not a big deal. So we talked about some options of either shortening or lengthening their amortization, just because the rates are higher, and we’re having these same conversations with all our clients. I can tell you, we have so many clients coming to see us that have mortgages renewing with the big five. They don’t love the rate, and sometimes when you refinance, you might not get a rate as low as you would be offered on renewal, but they’re choosing to take equity out or extend their amortization. They’re buying the payment, Todd. The rate is secondary, but we’re still giving them good advice, and that’s where I think, right now, we’re in the advice business more so than just doing a widget of a mortgage. Five years ago, we were just trying to stay above water because it was so busy, we were in more of a transactional business. Now I think it’s certainly shifted to more advice, which I’m here for.

Interest Rates and Market Predictions

Todd Veinotte
I mean, as far as rates go, how low do you think rates might go this time?

Clinton Wilkins
I think we’re going to see rates in the threes. There have been two times in history where the Bank of Canada is decoupled from what’s going on in the Fed, in the US. Typically, we move in concert. Not saying we do, but typically it’s pretty close. But there have been two times in history where one has gone one way and the other one has gone the other way. We might be in that zone right now. Inflation in the US is high, while inflation in Canada is under control. So, we could see the Fed in the US increase the rates, but the Bank of Canada continue to cut. What happens with tariffs can certainly have an impact, and a stress test is still at play for people. Stress Test is still at play for a refinance and a purchase on a renewal, changing between lenders. Which is great. So now, there’s more opportunity, I think, for competition. I think there were some times where people would just like to renew with their existing lender, because they’re like, “we don’t have to, we want to have to go through the stress test.” We don’t have to requalify. You still have to requalify, but no stress test, which is awesome.

Todd Veinotte
Something that I want to talk to you about in the next segment is upgrades and using HELOCs to do that, which is a lot more popular. HELOCs are back because this is something that I’ve recently been going through. I’m upgrading a bathroom. It’s fantastic if you’ve got to, so I like to get into that. Mortgage 101: your guide to home ownership. We’ll be right back.