ELECTION YEAR
To say that affordability in our local and national real estate markets is a big concern is the understatement of the year – so far. Given it’s also an election year, that record may not hold.
No question it’s a serious issue, and one that requires in depth discussion. But here’s the important bit: long term solutions.
As a Broker of Record and a long-term member of this industry and community, I am acutely aware of the issue. And, it hits close to home.
Our family is not immune to the issues of affordability in the housing market, and our kids have expressed their frustration and concerns about gaining a toehold in the marketplace.
Here’s where I get to play the grizzled veteran and remind you that housing affordability issues have always been with us, and getting into the market has never been easy. In fact, it shouldn’t be easy.
Let me explain.
For most of us, buying a home will be the largest asset purchase we make and the most financial responsibility we’ll likely take on in our lifetimes. Owning a home and having a mortgage is a massive commitment, from a financial and a time perspective. You are making a multi-year commitment to staying in one place, and making choices to possibly forgo other financial opportunities and lifestyles.
The real estate market, on average, has never performed the way it has in the past 5 years. Historically, properties on average have appreciated by 3-5% a year. If you bought a home and then decided you needed to move to a different community for a job within a year, there would be a substantial penalty to pay not only in mortgage interest and penalties, but there would also be an equity loss in order to sell. The market would rarely appreciate enough in 1-5 years to cover the cost of selling and early prepayment of a mortgage.
There was no rapidly increasing market value that would protect you in the event you were mistaken about your commitment to home ownership. The market I’m referring to “back in the day” was balanced. It might swing slightly to the buyer’s or seller’s side, but historically we’ve never experienced the extreme seller’s market we’ve just come through.
The pandemic market that sellers have enjoyed created conditions that made it extremely difficult for buyers of all stripes to jump into.
Inventory levels are building and interest rates are starting to move up – both of which will take the steam out of the price movement, and might even mean a 5-10% pullback on our way to stable conditions.
So, the question many of us are asking ourselves: are we pricing our kids out of the market? We are if they expect their childhood home to be the starting point. The property ladder has a number of rungs that our parents climbed in order to get to the home you and I lived in prior to our launch into independence.
There are ways to get into the market. A bit of creativity and non-traditional thinking will go a long way. We’ve witnessed this in our brokerage as clients have been able to buy when they teamed up with friends, pooling resources and buying a shared property. Is it ideal? If you asked them individually it’s not, but they saw this as a necessary step to getting into the marketplace. They’re looking at 5 years down the road, where equity has grown and they can then take the next step and buy individual properties.
We’ve already talked about the bank of Mom and Dad. It’s a real thing too! Parents pulling equity out of the family home and providing their kids with substantial gifts or loans to make a significant downpayment on a home. It goes without saying that this route requires a hefty dose of privilege that not all buyers are lucky enough to benefit from.
And of course, there’s nothing wrong with starting in something smaller, older and needing work. The term sweat equity is coming back into vogue for a reason.
I’m not being elitist or callous about the conditions buyers have been experiencing. Where I’m at is that, in a lot of cases when faced with challenges, people give up too early or aren’t prepared to look at alternatives. And to be clear, waiting around for a fabled market crash isn’t a strategy.
So, what’s this got to do with elections and politicians?
Plenty. Election time brings out the “best” in governments and those that want to govern: 30-second sound bites and promises of solutions that conveniently fit into a 2-4 year timeframe abound. These solutions are primarily election strategies – and, hey, if the solution helps solve the original problem, well that’s a bonus! This is the cynical view from an optimist.
Beware of those presenting solutions in a neat box tied with a pretty bow.
THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET
Take a look at the full key week comparison:
FEATURED PROPERTY
158 Woolwich Street South, Breslau
4+3 BED / 4.5 BATH / 2,126 SQFT
This open concept multi-generational home in beautiful central Breslau will have your jaw dropping. Originally built in 1960 this spacious bungalow was stripped down to the frame and almost completely rebuilt out of ICF and SIP panels, doubling the square footage and dropping the heating costs. This home now offers 2126 sq ft up and another 2085 sq ft in the basement - a total living space of 4211 sq ft. Enter through the front door to a spacious foyer with an extra deep closet. Your eye is drawn upward to the vaulted ceiling in the main open concept living area with a formal dining space, kitchen with built in microwave, wall oven, ceramic cooktop, island breakfast bar & the perfect sized living room with built in surround sound & gas fireplace. On the main level are the Primary bedroom with 4pc ensuite & combined laundry, & a walk in closet. This room also walks out to the spectacular swim spa and expansive yard! This is a real STAYCATION LOCATION! Here you will also find a large bedroom which can easily be two separate rooms, plus one more bedroom makes 4 on the main level. Finishing off this level is another 4pc bathroom and a powder room. Thoroughly thought out, this home includes a private 1 bed in-law suite (with laundry) & separate entrance that is only a year old. Having an in law suite doesn't mean losing the basement - savvy planning gives the main level about half of the basement for private use with another 2 bedrooms, 4pc bath and a family room. YES! 7 BEDROOMS IN ALL! Don't forget there is also a newly built 1200 sq foot deck space for your friends and family to spread out (30x15 & 28x29 feet), enjoy the swim spa/hot tub & the extra deep, fully fenced yard that is a true children's paradise! Finished off with a 2 car garage (21 x 27 feet) & all set on an amazing corner 85 x 206 foot lot with big, beautiful yard! Centrally located to Guelph, Cambridge and Kitchener! A true gem and must see!
