REal Talk
REal Talk
How Does March Break Affect the Real Estate Market - March 19th, 2022
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Paul, Frank and Steve begin the show by conversing about the sale and rental prices (1:20), mortgage brokers giving advice to politicians (3:11), increases in mortgage rates (5:49), and how increases in mortgage rates are impacting buyers (9:15). After the break, a listener phones in to ask how first-time homebuyers can navigate the real estate market (11:00) and the guys talk about the difficulty of baby boomers moving out (18:01). Then, the guys talk about how March Break affects real estate (21:06), the difficulty of finding a home to buy in Canada (23:49), how a “no convenience of offer” works (25:32), why real estate agents need a team (28:30), downpayment for a 30-year amortization (29:21), and mortgage penalties getting smaller (31:47). To end the show, the gang discusses curb appeal during the springtime (34:16), why the media aren’t talking about the increase in rates (37:54), and if you need a new pre-approval for when you got one in the fall (40:59).
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SPEAKER_01Welcome to Open House, the real estate and mortgage show on News Talk 580-CFRA. If you have any questions about mortgages or real estate, give us a call at 521-TAP. That's 521-8255.
SPEAKER_03Well, if ever there was a time you needed to know the latest on mortgages and real estate, it's now. Luckily, we have a couple of guys here that know what they're talking about. Paul Rushforth, Paul Rushforth Real Estate, Frank Napolitano, Mortgage BrokersAttawa.com. Good morning, gentlemen.
SPEAKER_02Oh, you're talking about us, Steve. I thought you were talking about somebody else.
SPEAKER_03Welcome to a thing or two. Welcome to the last day of winter, gentlemen. Is it the last day of winter? Spring tomorrow. Spring tomorrow.
SPEAKER_02Nice. Well, we've obviously the weather has been beautiful over the last couple days. I mean the one day they were at 14 or 15 or 16 degrees, whatever it was, was beautiful. I was outside in a t-shirt and I was getting a suntan. Awesome.
SPEAKER_03It was wonderful. A little sloppy out there today, though.
SPEAKER_04Yeah, it is. It is. We wouldn't know, Paul. We wouldn't know. We're still we're still at home doing the show for God's sakes. I know. I know. It's been two years now. Hopefully soon.
SPEAKER_03Two years. Two years ago. It's the 102nd show, boys. That is that is a lot of money saved on my end. Oh, here we go. Here we go. What are you doing with the time and money you're saving?
SPEAKER_04Certainly can't buy a house, that's for sure. Oh man.
SPEAKER_03I don't know. I don't know how people are doing it. I was taking a look at the the cost of just rent alone. How do you get ahead when you're paying so much for rent?
SPEAKER_02It's it's not even it's not even rent and it's not even housing. It's everything now. Like you go to a gas station, you go to a grocery store, you go to the pharmacy, prices are up on everything. It's absolutely crazy. Like I went to the grocery store the other day. It was just for my son and I. And my son's 13 years old, and it was like $400. I'm like, what why is grocery so expensive? Everything is just skyrocketing right now. It's crazy. But you talk about the rents and the housing prices and that, yeah. I mean, right now, for three, two or three years ago, you could have rented a townhome in Suburbia for anywhere between $14 to maybe a max of $1,600 a month. Now, if you can find something under $2,000, you're a steal of the deal. It's just that the rental prices are through the roof. The sale prices are through the roof, too. I mean, I was telling you guys just before coming on, we put a house on the market the other day that at $399 ended up selling it at $565. And it's like two years ago, that was half that price. It's just things are just going crazy right now. It's absolutely nuts. You know what the average rent is. Is gas expensive?
SPEAKER_03The average rent in Manhattan now, $3,700 a month. That's the average for an apartment.
SPEAKER_04Yeah. Is gas expensive? I don't know. I haven't been there in a while. $165.
SPEAKER_02You and your electric car, right? Yeah. You know, times like this, times like this, I wish I had an electric car. I can tell you. Timing is perfect. Timing was perfect. I used to fill my vehicle up for $85 the other day. I went, it was $136. I was like, holy curly.
SPEAKER_03And they've come down. It's come down a little bit. It was even worse. Has it come down a little bit? Worse a couple of weeks ago. Hey, wait till the liberals get in the new new provincial election there, Frank. Then your electricity bills will go up.
unknownOof.
SPEAKER_04Oof. Speaking of, I mean, uh big week coming up for us, the Mortgage Professionals of Canada. We're going to have our guest, uh, a special guest next week, Paul Taylor, who's been on our show before, the CEO and president of Mortgage Professionals Canada, because this week we are uh doing our parliament visits. So we are meeting with MPs from across the country. Uh in total, we have 85 visits already planned for this week where we're gonna sit with that uh down with some of the MPs and we're gonna discuss some of the things that we think Canadians really want moving forward. And uh, you know, this isn't about an uh we had a conference call yesterday, and one of the agents said, Well, this isn't fair, and it's like, no, no, hang on a second. I said, this isn't about us. This is about Canadians. Remember, we're going in there to give them our advice on what they should be doing. And, you know, one of the very first things is 30-year amortization for first-time home buyers. Let them get that 30-year amortization. I mean, chances are they're not going to be in that house for 30 years anyway. So on their next home, if they want to re-amortize it for less, that's up to them, but they'll have a significant down payment. But at least open the door for young Canadians or first-time home buyers to be able to get in on 30-year amortization. Uh, so it was so we got three main points. The other one that's really interesting is, you know, right now, you know that the qualifying rate is five and a quarter percent. But what we've seen this week, and again, it's been done very slowly and very methodically. I haven't seen any news where interest rates have gone up. Yet they've skyrocketed again this week and they've done it very quietly. Almost on a daily basis, we were getting notices saying that fixed rates are going up another 10 basis points. So this week alone, fixed rates went up 35 basis points. This week alone, with most of the lenders, very quietly on an almost everyday basis, just small increments. So now, you know, if you're lucky, you're getting a five. Like I think we have one lender that might be close to the 3%, like a 295 or 298. Most lenders today and most banks, uh, you know, one of the big banks yesterday sent us their rate sheet last night. Of course, they send it to us at 6.30 at nighttime saying the rates are changing, but their rates are up to 379 for a five-year fix. So huge, huge difference from a year ago. But what's interesting about it is that the rule of thumb, you know, we have to use the qualifying rate, which is five and a quarter. But we we really, because rates have been so low, we haven't had to use the other aspect of that, which is the higher of qualifying rate or the contract rate that the client gets plus two percent. So in this case now, we actually have to qualify people at 5.79% instead of five point two five percent. So even the qualifying has gotten tougher this week alone.
SPEAKER_03Now, what's the reason for all these increases, Frank?
SPEAKER_04Well, the bond markets have gone up. There's some uncertainty, obviously, with everything that's happening in the world. Inflation's the biggest reason. Let's call it spade a spade. The fact that everything has gone up the way it has. The feds in the U.S. raised their prime rate by a quarter percent. And so that was expected. What was a surprise to many was the verbiage that came after it. They think, or at least they predicted, that if inflation continues at the pace it's at right now, they will raise prime rate another six additional times this year. Just this year, another one and a half percentage points. Just this year they're gonna raise it. So uh again, that had the markets, the bond markets trending upwards, and as a result of that, we've seen that fixed rates have gone up almost on a daily basis this week, which I haven't seen ever in my career.
SPEAKER_03So, what does that mean for Canada? Does that mean our prime is gonna go up that much as well?
SPEAKER_04No question that April, our next meeting is uh coming up in two weeks, uh Bank of Canada meeting. No question that our quarter point's in the bag already. So it prime is coming up a quarter point. The question is, is it's coming up a half a point? We think, we still think they're gonna do the quarter point because I think they're also starting to realize that with the prices of everything else going up, they are teetering on potential damage control down the road because again, our economy is gonna start to fail, and therefore the R-word's gonna come into play, and that's what they're trying to avoid. So I think they got to do it very carefully. I think the quarter point is the way to go, and we're hoping that's the way they're gonna go for sure.
SPEAKER_03And these increases take what, about six months before you really notice them?
SPEAKER_04Well, I think you notice them right away if you're in a variable rate mortgage, obviously, because your variable rate mortgage is gonna go quarter point. And that's the thing that's kept us busiest over the last two weeks is clients that are in variable that have absolutely hit a home run over the last two years being in a variable. You know, some of them are at prime minus 1.2. So, you know, I say to them, but the prime rate's now at 2.7, you're at 1.5%. You want to lock in now, you're at 3.5%. You want to give up two percentage points, go for it. But for prime rate to go up two percentage points, I don't see it. Like at this point, you are committed to a variable. Just stick with the variable and just write it out. If you if you want to protect yourself, if if you're getting nervous about payments, then in if you were prepared to lock in at three and a half, I would say never mind locking in at three and a half. Just set your payments as if you're at three and a half. And now every single increment that uh prime goes up a quarter point moving forward, you'll you'll be uh in a position where it won't impact your payments. You're already set up with your payments.
SPEAKER_03What would two points cost at an average mortgage?
SPEAKER_04Well, again, it all depends on the amount of your mortgage, but you know, two percentage points. I mean, we said every quarter is about ten bucks or twelve bucks on a hundred. So, you know, if you're looking at a five hundred thousand dollar mortgage, you're looking at uh, what are you looking at sixty bucks for every quarter percent on uh on a six oh two points, you multiply that by eight, and all of a sudden you're at uh what do you at five hundred bucks a month more. So pretty significant. That's a lot. That is that's on a five hundred thousand dollar mortgage, though, right? So that's a bigger mortgage. I mean, not everybody's sitting with that big of a mortgage.
SPEAKER_03So no, but you said your average mortgage is four hundred thousand these days, so yeah, yeah.
SPEAKER_04Yeah, but that's the average, right? I mean, again, there's some people out there, the the people that have purchased the last two years, if they're first-time home buyers, they're probably at five, six hundred thousand for their average mortgage. But anybody that's on the home for five, six, seven years, a lot of them that we're seeing are in the twos and threes. That's where their average mortgage is.
SPEAKER_03So oh, you think you're gonna start noticing a difference in your business now as rates go up?
SPEAKER_02We already are. I mean, it's it's it's has pushed some buyers out of the game, and it's also pushed some buyers quickly into the game again, uh, knowing that rates are gonna go up even more. But it's it's I mean, like Frank said, as they as they go up, it's a it's a big impact on your mortgage and your and your payment. So it's it will impact for sure. Right now, what we're seeing is more people bustling into the market because of the the uh risk of rising rates, and that's pretty much what the common theme is right now. But we also have we also have a lot of people that were kind of like right on the fence of being able to afford something and now can no longer afford it. So it's like they're they're out of the game now, so it's which is a shame because now they're back into the rental game, which they were trying to get into the purchase game. So it's it's damaging either way, to be honest with you.
SPEAKER_04And this isn't an Ottawa issue, so so let's get that clear. Like, this isn't all about Ottawa, this is across the country, like almost and Alberta right now is going through a huge spike because all of a sudden, Alberta is a destination for investors to buy investment properties because obviously that market has been depressed for the last two or three years, and there's some good values. But now, you know, speaking to one of my brokers who's uh who works out of uh Alberta, she's saying the real estate market's starting to go crazy, just like it is in Ontario. It just took a little while for it to happen, but now it's happening there as well.
SPEAKER_03Yeah, I think we're gonna see a bit of a bubble here, don't you think, with interest rates going up, everybody clamoring to get into the market. Now the question is, are there properties to buy? And we'll find that out when we come back. 521 Talk 521-8255.
SPEAKER_01We return to Open House, the real estate and mortgage show on News Talk 580-CFRA.
SPEAKER_03521 Talk 521 8255. To the phones we go say hello to Ron in Ottawa South. Hello, Ron.
SPEAKER_00Good morning, laddies. Uh, I was just reading a TD bank poll, and they said 50% of first-time homebuyers are concerned about affordability. 50% don't even have a budget, and you'll be happy with this, Frank. Only 25% have spoken to a mortgage broker. So with the houses at 800,000, and I need 10% down payment for a young person, who's got 80,000 cash?
SPEAKER_03You do, dad does.
SPEAKER_00Yes, uh bank of mummy and daddy.
SPEAKER_04But then qualifying. Qualifying is tough too. Like all of a sudden, you're qualifying for a $720,000 mortgage. And, you know, for a young couple, yeah, for a young couple who's just, you know, at the at the beginning of their careers, their incomes aren't aren't, you know, they're not there yet. I mean, they're just starting. I mean, it's gonna take them some time. So, you know, to qualify for that much of a mortgage, you've you need to have a combined income in the 150 range, and there's not a lot of young couples that are quite there yet.
SPEAKER_00So what do they do?
SPEAKER_04Mommy and daddy. Yeah. Mommy and daddy uh either co-sign or guarantee it for them. Now, again, I mean, in a lot of cases, you know, what I find is that those those couples can afford it. So, you know, because we're having to qualify them at the higher rate, it's obviously much tougher. But, you know, when you do the actual math to it, now it's now it used to be there was a time when a couple of years ago, you know, if you compared the rent to the mortgage payment, it was fairly similar and it made sense to buy. Now you have to accept the fact that you know your rent where you are for a similar house is actually less than what your mortgage payment is. So you've got to put out a little bit more. But if you're, you know, if if you do the budget, and a lot of times the budget that I'll work with is what their net pay is. Like, listen, working with their gross pay doesn't work because that's not what goes in their bank account. What goes in their bank account every second week is what we work with. And from there we figure out whether they'll still be able to comfortably live the lifestyle that they want. Because if you're gonna move into a house, buy it, and all of a sudden give up everything that you guys love because you can't afford it anymore and it's gonna make you miserable, then you've got to ask the question is it worthwhile to buy a house at this point, or do we just gotta wait it out a little longer?
SPEAKER_00I spent a lot of my career in South America, and what they do there, when the daughter gets married, the father will buy the house and keep the title, and the son-in-law and daughter would pay them back. Uh if they don't pay them back, well, the father still has the house. Have you heard that in Ottawa area?
SPEAKER_03Paul is planning on your Paul, are you planning on doing that?
SPEAKER_02Well, hey, listen, I've already told my kids you're you're lucky I have lots of rentals, so you can move into one of those. So that's that that is very common. I mean, that's well, I wouldn't say it's very common, but I have heard of that, Ron, where you know the parent buys the house, they own the house. The only problem is is what's the difference between that and renting for the kids? You know what I mean? Like they're not they don't own the house. Maybe the father will leave it to them later on, but um, but they don't own the house, they're not owning anything, so they're not getting ahead, and that's the biggest problem. But I agree with you.
SPEAKER_00Once the house is paid for, then the parents will hand over the house to the kids.
SPEAKER_04Yeah, but then there's tax implications, right? What I would do in that case is I would say, you know, I do the title with the kids on title, and uh just make sure that you you always uh register the mortgage. If you're buying now, again, if you're making the payments, that's different. But if they're paying you rent, then you need to figure it out, right? From a tax perspective, maybe it doesn't make sense for you to buy it and them to pay you rent because now you got rental income and now you're dealing with that. Maybe it makes more sense to add them onto the title, make yourself, and again, a good conversation have with your lawyer to see where the tax advantages would be. But you know, figure out how you want the ownership planned and still be there for them, allow them to get into it, but but knowing that they can't do it on their own and they still need you to be able to move forward.
SPEAKER_03Now, would you add both on title or just your own kid?
SPEAKER_04Depends what you need to qualify. At the end of the day, it always comes down to what do you need to qualify? And if you need both on title to qualify, then you need to do both. Now, what lawyers are doing is they're putting percentages on ownership, on the deed itself. They're actually putting what the percentages is. So those could be amended. I just warn everybody when it comes to the mortgage, if there's three names on the mortgage, there is no one person's responsible for 50%, the other two are 25%. That's not the way it works. When it comes to a mortgage, you are equally responsible for the entire mortgage together. There is no percentages. You can do it internally, do percentages, but as far as the lender's concern, you're equal, uh, you're equally responsible for it. But on title, your lawyer can can prepare title with different percentages based on how you want to structure it.
SPEAKER_03Thank you very much. Thanks, Ron. Well, it's gonna get more and more complicated as people get more creative, right, in the next couple of years. They have to.
SPEAKER_04Like like Paul Paul's gonna see it. You you're gonna start to I I truly believe, Paul, you're gonna start to see friends buying houses together, two couples buying houses together, just to be able to get into the homeownership because they can't do it on their own, and it still makes more sense than renting, and it's a way to get further ahead. I think we're gonna start to see that. We're gonna see families buy houses together, you're gonna see parents getting involved with the kids and buying a house together. We're gonna see all of that moving forward because that's what's happened in other centers where the prices have gone crazy like they have here.
SPEAKER_02And that's why that's why we're seeing the bigger homes becoming popular again because a lot of families are moving in together. You know, mom and dad are moving in with kids, or kids are moving in with mom and dad, or two families are moving in together. We're seeing that a lot. Um, well, I'm not gonna say a lot, but a lot more than we should be seeing it. But you're right. I mean, probably one of the biggest questions I get almost every day is how are my kids ever going to be able to afford a home in this market? And they're right. I mean, I'm thinking about my kids too. How's my kids ever gonna afford a house in this market? They're not. They're not, they're gonna have to come to the bank of mommy and daddy. And that's why I think you said, what was it, about 35%, Frank, of mortgages have mom and dad attached to them? Is that you who said that?
SPEAKER_04Or is it well right now, 35% of mortgages in Canada, there is some assistance from a family member because they can't do it on their own. And that number's just gonna go up. That's okay. But that number is just gonna continue to go up. I mean, if we looked five years ago, that number was probably in the teens. And all of a sudden, just in a five-year period, it's gone into the 30s. Do not be surprised if another five years from now we're into the 50s, we're into the majority of people are getting help. Now, again, there's a lot of generational wealth, there's a lot more generational wealth today than there was five, ten, fifteen, twenty years ago. And the other interesting thing that we're seeing is that a lot of the parents are saying, Well, my kids are gonna get the money anyway. Why not help them while I'm alive? Why not help them get into the housing now? So I'm gonna leave it with them anyway. Why not start now? So, again, I mean, we're just seeing that that shift, that change. I mean, everybody's having uh just to change their mentality about what they want to do moving forward.
SPEAKER_03Where are we at for baby boomers moving out?
SPEAKER_02Well, they don't. It's so hard. It's it's hard. Yeah, like it's hard.
SPEAKER_03And I but aren't more and more of them now gonna rely on that money for their retirement? Like, isn't there a time where they're gonna get out of the house and start to rent and maybe cash in on some of that equity?
SPEAKER_04Yeah, it's too expensive to rent. You ask most of them and they'll tell you, like, I I don't want to rent a townhouse for $2,500 when I have this house with no mortgage on it. Uh why do I want to do that for? And you know, the the ones that want to cash out, I think, on the equity are uh it's different, right? If they're just barely making ends meet right now on their pensions, then I think it makes sense to do it. But if they're not, uh I'm I'm I'm sure Paul's gonna see a lot more uh potential uh older people now saying, you know what, I can't believe my house is worth $800,000. I never in my life imagined that. Maybe it is worth it to sell it now and and see if I can find something else, especially if they don't want to maintain a house anymore.
SPEAKER_02Well, that that's it. And we do see a lot of people who are becoming into snowbirds, right? So what they're doing is they're actually selling their house. They don't have to maintain the house. They're getting a rental, taking the equity and actually either buying something down south or just keeping the equity for something, you know, down the road. But yeah, we're seeing a lot of people that are doing that now too. They're cashing out uh and going into the rental game, even though it is super expensive to rent, but you're not worrying about your windows and your roofs and your foundation and all this crap. That's someone else's problem. And I we do see that. That's starting to become quite common as as the house's housing prices start to rise.
SPEAKER_03But for snowbirds, what's what's your take on, you know, sell the house, get a condo, and then fly south. You've still got the investment and you've still got equity.
SPEAKER_04Well, move in with your kids, or move in with your kids for the for the six months that you're gonna be here. Uh what's also popular.
SPEAKER_02What's also popular is cottages. So snowbirds, like this is what I'm gonna do when I'm when I'm old like you, Steve. I am going to I I I'm gonna actually I'm gonna actually sell my house. My winter months are gonna be spent down south, and my summer months are gonna be spent at my cottage in Constance Bay, and um that's what I'm gonna be doing. So we're seeing a lot of a lot of people doing that too. They just have a cottage for the summertime, and then they're flying down south for the wintertime. And and if they're not renting, they're staying at the cottage. Very few people really want to have ownership in the city when it when it comes to uh when they become a snowbird for sure.
SPEAKER_03Why is it you call it a cottage, Paul?
SPEAKER_02Why don't you just say my house in Constantine? Your second house. Well, that's actually my first house because it's actually nicer than the house I'm living in. Hey, how's the water doing there, by the way, before we go to break? Well, so far so good. It's still frozen, right? So it's uh it's but you know, interestingly enough, there's no you can't get insurance up there, eh? Flood insurance? Yeah. No one no one has flood insurance up there, which is which is scary for some people who are right on that water. At least I'm built back a little bit and higher, but uh yeah, it's tough.
SPEAKER_03Yeah, it looks like it's gonna be an okay year, though, from what they're saying, as long as we feels like it. Yeah. Yeah, let's hope. 521 Talk 521-8255. We'll be right back.
SPEAKER_01We return to Open House, the real estate and mortgage show on News Talk 580 CFRA.
SPEAKER_03Welcome back with Bragg Napolitano and Paul Rushforth. All right, Paul, I'm a little concerned about interest rates. I want to get into a house. Will I find anything?
SPEAKER_02Well, you know what's funny is I mean, last week was probably not uh a week we want to use as a barometer because of March break. And I think we saw, you know, our our new listings by week was actually down last week. Uh average sale price was about equal, and uh sold properties actually increased. But there's a thousand and eighty two homes on the market. Which is similar to where we were last week. I think what's happening though is especially during March break, a lot of people held off putting their house on the market, knowing that listen, no one's been away for two and a half years or two years, right? So people wanted to get away this March break. So I like just by taking a look at Facebook, because like everybody was away. So I think it was a slower week last week last week, mainly because of March break. But I think you're gonna see the market start to flood with listings coming up as soon as March break's over. When I say flood, I mean I was just gonna ask. When I say flood, I mean not typically the way it's flooded, but it's there, I think the listings are gonna start hitting the market at a more feverish pace. Um, I know our listings are starting to pick up as well, but we had a lot of consumers, a lot of clients are that uh that said last week, I don't want to hit during March break, and we're like, we agree. And there's a couple that actually did hit, and my agents called me and was like, it's been on the market for a day. We've had two showings. I'm like, yeah, that's kind of a normal market, but yeah, it's it's mainly because there's so many people away. And I think next year, I'm sorry, next week, it's just gonna really pick up and be robust.
SPEAKER_03I think March break is kind of that mental barrier, right? As soon as that's over, then you're saying, All right, there's nothing else that I have to worry about. Let's get the house rolling. And and I think now with interest rates going up, March break being over, weather getting nicer, it's the perfect case scenario. I think we're gonna see a lot more listings than we did last year at this time.
SPEAKER_04It is, and usually Easter is right after, but this year Easter's uh you know quite a ways away. I mean, Easter's the third weekend of April, so I think that uh normally, you know, we have the March break and a couple of weeks later's Easter, so that's that lull, and then after Easter it opens up. I think it's gonna happen before then because Easter is so far away.
SPEAKER_02Yeah, I agree too. I think I I honestly think as of Monday, I think we're gonna start seeing listings hitting the market. Uh, you know, not what we're used to, but I think it's gonna be a little bit better than last year and potentially the year before. I mean, with mass coming off and the world really starting to open up and become normal again. Uh, it's it's like the the perfect storm, perfect storm. And I think that we will see a very good start to our spring market next week. Uh, even though we've already gone through a part of our spring market. I've always said, you know, January 10th is a start of our spring market. Um, and now we're gonna start seeing people who believe like this is the start of our spring market and start to hit the hit the uh the market running.
SPEAKER_03Are we gonna get the listings though? Like there still seems to be that hang up of people wanting to list their home for some reason.
SPEAKER_02Well, there's tons of people that want to list their home. The problem is trying to find a home to buy, and that's the biggest issue. I mean, when we're working with people that are uh that have to buy and sell, first thing I say to them is let's not even worry about your listing. Let's worry about what we can find that you're gonna have to buy. And probably now, more than any time in history, the house that you buy may not be your perfect house. It's just, you know what I mean? Like it's you don't have a lot of time to be choosy, you don't have a lot of time to shop around, you don't have a lot of time to say, okay, I'll tell you what, that one's nice, I'll keep it on the back burner, but I'm gonna move on to a couple more. It's gone. You know, sometimes it's gone. And we used to go over the last probably month, most of the listings were no conveyance, meaning offer date five days away. You can't bring me an offer till this time on this day. Now we're shifting a little bit more to offer date five days from now, we will accept a preemptive offer, like a bully offer. And that's really where we're we're teetering now. But if you don't keep an eye on the market every single day, you don't know if you should be just doing a regular listing and no conveyance or whether you should be offer date with um with preemptive offers. You really have to keep an eye on the market because every Tuesday meeting, I find that the message changes. You know, like this Tuesday meeting, I'm gonna say to my team, no conveyance might not be the way to go. Preemptive might be the way to go, you know, and it just changes. It's like last year we talked about the word I used all the time was fluid. It's a fluid market. If you don't keep your pace on it, I don't know how someone does this part-time, put it that way. If you don't keep your pace, uh keep your eye on what's happening in the market, you're you've lost the market.
SPEAKER_03I always wondered what no conveyance meant.
SPEAKER_02Yeah, so no conveyance means like listen, if we if we have a, yeah, I see too many agents out there that say, offer date at this time, no conveyance of offers, but we're open to preemptives.
SPEAKER_03Yeah, so it's one it's one or the other, right?
SPEAKER_02It's one or the other. A no conveyance means, let's say we list your house at 700 and I have a no conveyance till Tuesday at five o'clock, and someone calls me and says, I have a $1.4 million offer for you. I can't even tell you as a seller. I'm like, sorry, I can't accept it. Offer date offer data is at this time, you know. So that's why you have to be careful because sometimes if you get a preemptive, you're gonna get that awesome offer. Sometimes you do no conveyance, and we saw a lot of times last week that no conveyance date went by and they had to take the no conveyance off and then accept offers regularly. So you just have to keep an eye on what's going on in the market and what language you need to use, what strategy you use.
SPEAKER_03In this market, isn't it? Isn't it so exciting enough that you don't need to put that in? I mean, when you're there's so few listings that you're gonna generate interest no matter what you do, aren't you?
SPEAKER_02Yeah, you are. But here's no conveyance when you're getting tons of offers, sometimes no conveyance. Let's say you got five, six, seven, ten, twelve listings on the go, and you're trying to balance, you know, all these offers coming in, all these showings coming in. Sometimes no conveyance is easy because you know, okay, Tuesday at five o'clock is when I'm going to deal with this house. Wednesday at six o'clock is what I'm gonna deal with this house. So it just makes it a little bit easier for the listing agent, you know, in a crazy market, because you could have all these listings and you could have uh you're you'll accept preemptive offers. You could be getting offers coming in left, right, and center, and you're like, oh my God, how do I handle all these offers? It's not easy. It really isn't easy when you're carrying a lot of listings and when you're trying to manage a lot of showings and a lot of offers.
SPEAKER_03Does it help that?
SPEAKER_04But at some point you're gonna lose, you're gonna lose some buyers, right? You're gonna lose some buyers on the no-conveyance because you know they're gonna find something else that doesn't have an old conveyance, and you're gonna lose somebody, you know, if they have to wait till Friday. They might find something on the Wednesdays. So it's uh it's a balancing act. I I agree with you, Paul. It's it's fluid, it's just a fluid market right now. You have to be able to adapt on a dime, otherwise, you're gonna be left behind. Whether you're a vendor or a buyer, it doesn't matter. You have to be able to adapt.
SPEAKER_02So whenever we list a property, we always send an email out to the team to let a team know what we've listed and what's coming up and stuff like that. And a number of times we'll get an email from the team saying, just listed 123 ABC Street, uh, listing price 849. But that might change by the time we go to market. So it's like it could change. I mean, let's say the neighbor sells the exact same house and sells for 950. Now what do you do? Yeah, you're going on at 850, or what are you gonna do? You're gonna 950? So you just have to keep an eye on the market. Um, and you know, by the time we take a listing, we usually take about four or five days to prep it and do our marketing and get everything prepared, get a professional photographer through the door. So we have that time period. In that time period, anything else that sells could shift and change the market. So we got to keep an eye on what's happening with your home to make sure we give you the best advice and get the best price out there for you.
SPEAKER_03How important is it to have a team behind you when you get so many multiple offers at once? Do you rely on the team in that scenario?
SPEAKER_02Listen, real estate has always been a team sport, um, and I believe it's even stronger team support now. Um trying to do this alone, I have no idea how agents do this alone. Uh, you need that team. I mean, mainly because our sole job is to get a buyer through the door for you, get your top dollar, negotiate. Uh if you're spending time on signs and lockboxes and you know, advertising and marketing and websites and all this, how are you out there trying to find buyers? How are you out there trying to get your home sold for the most amount of money? You just can't do it. You can't juggle everything. And that's why, you know, with my team, I've taken all that away from my agents. I just allow my agents to go out and sell homes and help people buy and sell properties and not worrying about all the minutia that they have to do in the back office. So uh it's if you need a team. You definitely need a team.
SPEAKER_03Frank, how much do you need uh down payment in order to get a 30-year amortization?
SPEAKER_04Need 20% down for you to get a 30-year amortization. At 20% down, uh you can get a 30, and if you go with an alternate lender, there's alternate lenders out there that are offering 35-year amortizations as well. So again, for some clients, uh, you know, everybody focuses on the interest rate when it comes to your mortgage, but for there's a there's a larger group of clients now that they want to know what their monthly payment is, and they're willing to pay a half percent more uh on their mortgage if it means that they can go to a 35-year amortization and reduce their payments by two or $300 a month because that's more important to them. Just like we get clients that are willing to pay a penalty, get out of a lower interest rate mortgage because they're sitting on $40,000, $50,000 of unsecured debt that's costing them a lot more money on the interest side. But but even more important, it's costing them a lot more on the monthly payment side, and that's the part that they that creates their stress. So um everybody's different. I mean, there is no right or wrong. Uh, you know, everybody's circumstances are unique, and I think it's important for the customer to get what they're looking for, and they'll make a sacrifice. Like I said, they'll sacrifice a half a percentage point if it means having a more comfortable payment that allows them to sleep at nighttime and not stress.
SPEAKER_03Is that what that five years works out to on an average mortgage? Two, three hundred bucks a month?
SPEAKER_04Could be. I mean, it all depends on the amount of the mortgage, it all depends on the interest rate, it all depends on where you're at. But you know, somebody that's sitting out there with a car loan payment of 750 bucks and, you know, a couple of lines of credits with balances on them, and a credit card and maybe a student loan, and they're putting out $1,400 a month, and that's creating all their stress. And the reason they have credit card debt and line of credit debt is because they can't meet their month-to-month, like their budget is off. So for them, in a lot of cases, it makes sense to be able to put everything together because of all the equity that's been built over the last two years with the property values. It makes sense, even if it means they have to pay a bigger penalty, maybe they have to go up a half percentage point on the mortgage. But now their payment goes down in half, gets cut in half, and they're able to breathe again. And I think that's more important. I, you know, if anything has taught us these last two years, uh, anything can happen. So let's, you know, let's live life. Let's let's make sure uh, you know, we take everything we can out of every day that we're here.
SPEAKER_03Mortgage penalty's got to be getting smaller now as rates go up.
SPEAKER_04What's interesting is that we've seen that the uh discounted rates or the the contract rates go up tremendously. I'm impressed that none of the banks have raised their posted rates. So again, the posted rates today, I know shh, the posted rates today are the same as they were a year ago, yet the interest rates for five-year fixed are as high as one and a half to two percentage points more. So so now if you're going to a bank and I was looking at some of the banks this week, you know, a lot of the banks are still at 4.79% for their five-year posted, and you're getting 3.5%, maybe, let's see. So now all of a sudden your discount's only 1.3%. So breaking your mortgage, if you know, if you're if you're forced to have to take a mortgage now and the R-word happens that rates start to come down, uh, you'll probably be in a good position to be able to break out of the higher rate mortgage and get into a lower rate mortgage at a penalty that's more reasonable than it's been in years.
SPEAKER_03Is it w is it worth taking a look at getting out of your mortgage and renegotiating and paying off that bad debt now, even if you're going to pay a little bit more?
SPEAKER_04Well, again, it's a case-by-case basis. I mean, for some people, 100% worth it. Doesn't matter. They're paying more, more interest doesn't matter because their lifestyle has been compromised because of all these other payments and they're miserable. They're not happy, they're staying up at nighttime, they're stressed. So it makes more sense to do it because that's what they're looking for. For other people, if it's all dollars and cents, may not be worth it because as long as you're still comfortable, and some of them will say it doesn't matter. It just I just won't do it. And that's okay too. That's why I say it's a case-by-case basis. Not everybody needs the same thing.
SPEAKER_03With the extra interest you're paying, couldn't you pay down the principal that much quicker and still you'd have to do it? Depends.
SPEAKER_04Listen, it depends. I mean, uh with some banks, you know, you you call a bank and the penalty's $20,000 and you have two years left. You'll never make up that $20,000. It just doesn't make financial sense. But some people still do it because it's not about it making financial sense. It's about them enjoying a lifestyle that they want over the next two years, and they're stressed out based on where they're at.
SPEAKER_03521-Talk 521-8255. We'll be right back.
SPEAKER_01We return to Open House, the real estate and mortgage show on News Talk 580 CFRA.
SPEAKER_03Welcome back to the show with Frank DePallitano and Paul Rushforth. This is Steve Gregory. All right, Paul. Two words now. Spring tomorrow, two words come to mind. Street appeal. Time to clean up, right?
SPEAKER_02Oh, yeah. And this is always a tough time. Like, you know, first of all, this is where we make sure your foundations are okay because when snow's melting and spring comes, you don't want any leaks. So make sure you're checking your basement. Uh and the other thing, too, is yeah, like we're probably, I don't know, what do you think about five, six days away from having no snow around here? Oh, less than that.
SPEAKER_03Less than that.
SPEAKER_02You'd think, yeah. Well, I mean, grass looks terrible, gardens look terrible. So if you're selling your house, I mean, I'm not saying go put flowers in because it's too early, but clean it up. Clean it up. The curb appeal is super, super important. Uh, go get some fake, fake uh pots and plants for the outside if you want. Just make sure the curb appeal is is is tickety-boo. Because if you you want someone to look inside your house, the first first view is the outside of your house. So make sure that looks great if you want to get people through the door.
SPEAKER_03But clean, right? Like take a pressure washer, get rid of any salt stains that are there, that kind of thing.
SPEAKER_02Yes, absolutely. Um, salt stains for sure. Uh, but the the main thing is if you didn't uh cut some of your flowers back before the the winter time, like if you didn't do it in the fall, you gotta do it right away. So make sure you're doing that, make sure your house looks neat and tidy.
SPEAKER_03Get rid of the things like get rid of the wet leaves that you forgot to take care of.
SPEAKER_02Yeah, yeah, get rid of all that stuff. And and then inside, some of the little things you can do inside would just be declutter, clean, smell, paint, and light fixtures. Those are some of the best things you can do. I mean, the the the biggest thing is clean and declutter, clean and declutter, make baseboards, make sure they're clean. Just make sure that your home is show ready. I mean, I monitor all the feedback on my uh on my listings, and uh I sometimes I'll see feedback like, yeah, the home was dirty or the home was this. And you can't have that. If you're selling your house, you should never have someone walking through your house saying it was dirty. Ever. It has to be clean when you're showing your house. But you're right, Steve. Curb appeal, especially this time of year, is super, super important. If you want someone to look in, they have to you have to shine right off the bat.
SPEAKER_03And how many lemons should you have on the kitchen table?
SPEAKER_02You know what? There's little tips. There's little tips that we give you when you're trying to sell your house, even something as little as baking. You know, baking so that smells through your house, like whether it's chocolate chip cookies, whether it's cinnamon, whatever it is, just you know, when you're walking through someone's house and the first thing you smell is something really appealing, you're already in that good mood. You're you're focused on your showing, and it's it's just a it's something you need to do. So staging, um, smell, things like that is super, super important.
SPEAKER_03So, how often do you have to be outside of your homes before you sell them, Paul? Very true, very true. Get the fumigator, get the fumigator. Paul's been here, Paul's been here.
SPEAKER_02I see you missed me, Steve. I do, I do.
SPEAKER_03Hopefully, maybe next week you guys will be back and we can actually insult each other in person for a change. Oh, that'd be so nice.
SPEAKER_02Frank, I hope you can find your wallet from for and dust off some of those cobwebs.
SPEAKER_03Hey, Frank. So do you think do you think we do you think we might be in the studio next week? I'm hoping we are. I don't see why we wouldn't be, but I don't set the policy around here. Yeah. When you walk through the studio, are you masked? Do you have to mask? Yeah, I mask till I get in here, but who knows what it's going to be next week. You know. And mainly I mask because I don't want to scare people. Yeah. You do look better with the mask. I do. So true. I do. I haven't I haven't shaved in two years. Steve hasn't brushed his teeth. Steve hasn't brushed his teeth in two years. Frank, why so quiet on the media front as far as rates going up? Didn't read a thing about it this week.
SPEAKER_04I think again, it's it's very gradual. Like generally, what happens is big changes get news. And uh, and listen, there's other things that are happening in the world that's really taking up a lot of the media right now. And uh again, I can't believe we're in 2022 and we're watching one country bomb another. It just to me it just it's scary. But um, but I think that that's taking up a lot of the news media, and obviously the the COVID. So I just think that it just gets a backseat. And uh, you know, I think inflation's at at one of the top stories, but it just again, the banks have been methodically, very quietly raising their rates in small increments that they don't get any headlines whatsoever.
SPEAKER_03Is it worth renegotiating a mortgage? Do you think are you are rates going to go up next week, the week after that, if you're close, if you're within four or five months?
SPEAKER_04We're trending upwards, so I think if you're anything within six months or a year and you're really nervous about rates continuing to go up, then you might want to revisit it now and and and maybe get ahead of it, even if it means that there might be a small penalty to do it, which which sounds crazy. For a lot of customers, it's like, well, wait a second. So I'm at 2.89, I got a year left, and if I renew now, my bank's offering me three and a half, so I'm gonna pay a penalty, plus I'm gonna go for from 2.89 to 3.5 for the next year, so I'm paying even more interest. That really doesn't make financial sense. And the answer, you know, just just looking at it straight up, no, it doesn't make sense. But you have to, if you're nervous that rates a year from now will be four and a half percent, then it might be worth it for you to do it. But if rates are at four and a half a year from now, then I would say to you, then you definitely want to go into a variable a year from now, and you don't put yourself in a position where you're gonna be stuck with that high rate for the next five years.
SPEAKER_02So what about people don't really you don't really believe we're gonna be in the fours, do you?
SPEAKER_04Well, I I I could have told you, you know, if you asked me a short three months ago, no way we'd be in the mid-threes where we're at now. But again, I mean, I mean, the one thing that we have to now come to terms with is that everything that happens in the world impacts the bond market. So it's not, again, I mean, you know, inflation's where it is because of what's happening in Russia. This has nothing to do with Canada, but because oil prices have gone up, it it feeds into food prices going up because food gets from wherever it is to the stores with fuel. So because fuel's gone up, food prices have gone up, and it just translates to everything else. So therefore, we have to uh you know accept the fact that it doesn't matter if we're humming along, because clearly you look at Stats Canada, our jobs are off the charts right now, our unemployment's at the lowest it's been even pre-pandemic. So you would think that our economy is humming along, but the uh, you know, under the surface, we're seeing inflation that's really impacting the average Canadian, and therefore uh we're seeing rates go up because of that. So, yeah, could we hit the fours? It's possible, Paul. I mean, it really is, because this is just uncharted waters that we're in again.
SPEAKER_03Uh, just before we get to birthdays, anybody that got a pre-approval in the fall, should they get another one?
SPEAKER_04They have no choice. I mean, I mean, they have to re-qualify because now their rate has probably gone up anywhere between a half a percent to one full percentage point. So now they got to relook at their numbers to see whether they qualify. Uh, it's possible that their qualifying will be impacted too, like not just their payment, but you know, before we were well less than 2% between the contract rate and the qualifying rate, but now that gap is gone. So, you know, if you qualified at five and a quarter for a certain amount, and now you're getting a five-year mortgage, and that rate is you know 3.39, now you have to qualify at 5.39. So that that could impact how much of a mortgage you can get as well.
SPEAKER_03Good question for your agent, say, Paul. When did you qualify?
SPEAKER_02Yeah, exactly. Absolutely. Um, so if we are in the studio next week, Frank, are you gonna wear your wife's sweater like you're wearing today?
SPEAKER_04Uh it it is a I I'm still honoring St. Patty's Day, and I know on Zoom you can't see it, but it's a green sweater.
SPEAKER_02Very nice. You know it's your wife's. We know it's your wife's. Yeah, okay.
SPEAKER_03I like I like the lace. Yes, the lace.
SPEAKER_02You know what? You should wear wear them with your caprice again.
SPEAKER_04You know what, Paul? Paul, you got the same lace coming off of yours. That's why it's funny that you're mocking mine. Birthdays, Frank. Uh, I've got uh uh what, what do I have? Five birthdays. Um Melissa, Doxie from our office. Happy birthday to Melissa, Robert Borden, and Darren Keck, our good friend Darren Keck, celebrating his birthday this week. Um my uh uh Carla celebrating her birthday. Uh Alfiel, the king, the drywall king's wife, Carla, our good friend, celebrating her birthday. And then and the one that's most important for me, my dad, 90 years old on Monday. Nine for my dad, who fought colon cancer in January, had surgery, and you wouldn't even know it by looking at him. He's just moving around just like normal uh Superman in my world. So my dad's celebrating 90, and just again, supporting local businesses and charities. Villa Marconi today is having their uh drive to raise money because they do need a new roof. So uh want to get a word out that if you can help Villa Marconi, that'd be awesome.
SPEAKER_03It's amazing how long you can live when you don't wear your wife's clothes. Paul, anything?
SPEAKER_02No, I have nothing other other than support local, everyone.
SPEAKER_04Yep. You sure it's not one of your kids' birthdays, Paul?
SPEAKER_03Um Paul at PaulRuckworth.com, Frank N at mortgage brokersautowa.com. Have a great week, gentlemen. Have a great weekend, everyone.