REal Talk
REal Talk
Open House | Real Estate & Mortgage Talk
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Paul, Frank and Steve begin the show by discussing an increase in listings as well as high rentals available on the market (1:33), whether interest rates are affecting the listing drought (4:05), how inflation is affecting real estate (5:31), and the delay with new build properties (7:52). After the break, the gang converse about real estate election promises (13:20) and Canada’s supply and demand issue (20:04). Then, the guys talk about whether people should lock into their mortgage (22:11), the crazy home prices in Kingston (29:30), and the popularity of buying in the outskirts (30:33). To end the show, the gang discusses what to avoid when buying a house and the importance of home inspections (33:01), “home warranty wraps” (36:25), and when you should reevaluate your mortgage (39:58).
Welcome to Open House, the real estate and mortgage show on News Talk 580-TFRA. If you have any questions about mortgages or real estate, give us a call at 521-TAP. That's 521-8255.
SPEAKER_02Welcome to Ottawa, where the men are women. Boy, it's cold out there today.
SPEAKER_03Great way to screw it. Are we the coldest capital again? I'm betting we are.
SPEAKER_02It sure feels in the world.
SPEAKER_01You know, I was on uh I was on a Zoom call with a bunch of my uh Canadian realtor friends from out west, and they've had a really cold snap for the last two weeks, and they're finally one of my guys from uh Red Deal, Alberta, he said it's yesterday when we were freezing here. He's like, it's six degrees here. We're gonna have no snow by the end of the weekend. I said, Well, not here. We're like minus 30 with the wind chill here.
SPEAKER_02It looks like we're getting a lot of snow on Monday.
SPEAKER_01Yeah, it looks like it.
SPEAKER_02Yeah, well, there you go. You know, if you got a bad roof, now's the time to list your house.
SPEAKER_01Yeah, exactly. If you have the shingles that are curling up, it's time to list your house.
SPEAKER_02Hey, I gotta tell you guys, I'm getting a little hungry. This is the 93rd week without breakfast.
SPEAKER_01Wow. Uh I I know I'm hungry. Yeah. I've already done the math. I can buy another house with what I've saved. Yeah. Yeah.
SPEAKER_03You keep thinking that.
SPEAKER_02Hey, Frank DePolitadel's here. Paul Rushforth is here. And uh, please tell me the market is beginning to take off again.
SPEAKER_01Well, you know what? I I said earlier that I feel like the ball is starting to roll. Uh, we are starting to list more properties as a company, so I'm assuming other companies are listing more properties as it comes. Uh, but we're still very shy on the active listings. We're still at 756 active listings. Uh, you know, 526 of those are residential, 230 of those are condos. But in the last seven days, there's been 244 homes hit the market, which is awesome. Uh, and there's been 226 homes sold. So it's telling me that what's hitting the market is actually selling, which is great news. Problem is we just have no inventory. And so that we every time we hit a house hits the market, it's gone. So, you know, if you're sitting on the market right now, you need to tell yourself there's something, either there's a condition problem with your house or there's a price problem with your house. So um, you know, it you have to look in the mirror if that's the case, because our market is is is red hot right now. We're just very, very inventory starved. And I always talk about the rental market too. 720 rentals on the market, 756 active homes for sale. So it's we're almost one for one with rentals and uh and homes for sale. And you know, I I look at the Bar Haven, New Orleans, and the Canada. In Orleans, there's 28 for sale, Bar Haven, there's 18 for sale, Canada, there's 28 for sale, yet there's 45, 80, and 76 rentals. So in in Bar Haven alone, there's 4.4 times the amount of rentals than there are homes for sale. And it's it's it's just we need those listings. And and I'm telling people, there's a lot of people right now that are saying, you know what? Maybe I'll wait. I'll wait till March and April and May. Well, you've missed the market. Get your home on the market right now. I've been saying this for a couple weeks now. Get your house on the market. Our market is already starting to take off and the ball is starting to roll. And I think by next week, we might be up to eight, nine, even a thousand homes on the market if we if we if we keep this momentum going.
SPEAKER_02Sounds like those rentals aren't turning over at all.
SPEAKER_01It's they're really not. There's we're seeing homes that are getting rented, but you know, if you're a if you're a rental, let's say in Bar Haven, you have 79 other comparables in your area. So it's like it's it's tough to get your home rented out. And there's and I'm just looking at you know, Orleans, Canada, and Bar Haven, but you know, you look at this the sum of those, 74 homes can sit for sale in those three areas compared to 201 rentals. There's 2.7 times the amount of rentals in those three areas, which is absolutely crazy.
SPEAKER_02Frank, at what point are interest rates going to factor into this and get people moving on buying and selling?
SPEAKER_03Well, I don't know. I mean, that the the housing inventory, I think as much as interest rates have something to do with it, they really don't from a standpoint of hey, if you're looking to buy, you're looking to buy it. But the bottom line is there's no inventory. So uh, you know, whether you can lock in a rate, I think you should lock in a rate because rates are on the uprights. There is a 50% chance that actually Bank of Canada will raise prime now on January 26th. So here we talked about it happening in April, and now it looks like it might even happen in January. There's a lot of pressure right now on Bank of Canada to increase their prime rate. Uh, it's gonna be a quarter percent, so it's not gonna be uh dramatic, but nonetheless, it's just a start of what might be two or three or what some banks think five increases in 2022, which is crazy.
SPEAKER_01Frank, just out of curiosity, I know our listeners can't see us right now because we're on Zoom, but what the hell is this background?
SPEAKER_03It's Halloween, although it's not Halloween, but that's okay.
SPEAKER_01It's like I see you on the picture frame, I see Steve Camilla picture frame. The listeners are saying, what the hell is he talking about, right?
SPEAKER_03Just having some fun with backgrounds.
SPEAKER_02Frank has a little too much time on his hands. Yeah, yeah, right. I like it better last week. You had us on a ski lift. I thought that was kind of funny.
SPEAKER_03Yeah, I might do the same thing, although it's too cold. I don't want to.
SPEAKER_02I enjoyed the ski lift. I enjoyed that. Yeah. Hey, so the inflation rate in the States is something like 7%.
SPEAKER_03Highest in, I don't know, so long that obviously there's a pressure on them. And I think they're gonna start to raise their uh their prime rate uh starting this month as well. But at the end of the day, uh inflation's here for the next little while. I think it's uh but inflation is caused by supply and demand. And never mind just the housing part. There are supply issues in the States. I mean, they show some some grocery stores that don't have food. Yeah, their food shelves are empty. So uh again, that's what creates inflation because that's an opportunity for for someone to set the prices higher and and therefore it creates inflation. We're seeing it with gas prices at $1.42 or $1.43 a liter. Uh, we're seeing it across the board. Milk, I mean, there was a you know, I saw a news clip where the lady said, normally last year that this amount of groceries would have cost me $120. This time it was $290. Like, this is crazy. So I gotta cut out other things, my gym memberships, things that people need for their mental health because of inflation. So inflation's a hence why I think you know there's that added pressure for prime rate to go up January 26th. Again, not the end of the world, it's a quarter percentage points. The bond market has already priced in a quarter percent increase. So we're already the bond market's already priced in a quarter percent increase for January 26th. So that could happen. Again, will it slow down the market? What market? There's no inventory right now. And from what I'm seeing, Paul, and I don't know if you can the last two weeks, I've had clients lose out on homes and they've went gone in well over the asking price and they're losing. So what I'm starting to see, the same thing that was happening last spring, is starting to happen already in January.
SPEAKER_01Yeah, we're seeing a bit of a mini version of it already. Uh well, there's no inventory. So if something nice hits the market, you you might have 10, 15 people bidding on that on that property because there's nothing available. We've had, I'd say, probably of the homes we've sold already this year, I would say 40 to 50 percent have gone over asking price. So it's we're seeing it. And we're there's a couple that have gone way over asking too. So when I say a mini version of it, you know, in the start of 2021, we were we were seeing, you know, 100, 200,000, 250,000 over asking price, where the ones we've sold recently have been about 10 to 15 or 20,000 over asking. So they're still going over asking, but just not as crazy as they were.
SPEAKER_02Well, when in January last year did it really take off, Paul?
SPEAKER_01Right away. We noted we felt this last year, and almost in December we started to feel it. Uh, and interestingly enough, I'm starting to feel it again, but but not like I don't think it's gonna be crazy like like 2021. But I have that same feeling and that same sense that it's it's going that way. Um it's just and and I kind of felt it a little bit later this year. I felt this one this week. This week I really started I started to notice how strong the market was gonna be.
SPEAKER_02Yeah, I would think that you know, with the fact that rates are going up, if if I'm moving up in homes, I want to get it sold quick and get myself into a mortgage as quick as I can, right, Frank?
SPEAKER_03Well, you want to lock in a rate, but at the end of the day, I mean the issue becomes, yeah, you can sell your house real quickly. It's finding a house that you really like. And, you know, the ones from for builders too, and listen, I mean, we're facing a lot of builders that are still delayed, still behind schedule. Uh, you know, they're telling their their buyers that two weeks, three weeks before that their house is not going to be ready for another month, month and a half. And I I don't understand how this is allowed because if you're renting, you're having to not give up your property and likely have two extra months of rent payments while you have your home just because the builder cannot give you an accurate date. Then listen, it's not entirely the builder's fault. You know, whether kitchens are behind schedule, which they are, most kitchen places are way behind schedule. Um, everything else across building a home. And listen, building a home is great for our economy, the jobs it creates and everything else, but at the end of the day, right now, everything's up in the air. We're we're still in this unchartered water territory where uh, you know, even buying a house from a resale, I mean, as much as many of them close on time, there's always the potential for delays, and everybody has to be ready for it.
SPEAKER_01And that's across the board. I I was talking to uh two of my American realtor friends uh this week, and one of them was saying the exact same thing. He's down in Texas, and he's like, our builders are a mess. He says, Some of our big track builders who are always guaranteed to close on time are just not closing on time because they just can't get the products. And so we're seeing it all around the world now, and it's it's uh it's becoming very, very tough. And I've seen even here in Ottawa, some of our major builders who have not met their targets, which is usually unheard of. Usually they're sitting for a couple months before you're even ready to move into it. But they've uh they haven't hit some, some big builders haven't hit their targets. So I've been warning some people, ah, that's a better background. I like that one.
SPEAKER_03Okay, there you go.
SPEAKER_01So I've been warning, I've been warning some people uh who are buying off a builder to really think about what they want to do with their property and when they want to sell it, and do they have a backup? We always try to get them to have a backup just in case, because even though you know you can drive by the house and it says it's oh, it's almost ready, it's like you know, 95% ready. What's the last five percent? What are they missing? Is the product in stock? Can they get the product?
SPEAKER_02Um it's the finishings that take the time, right? The house goes up. It is the house goes up pretty fast, and you go, wow, look at that. And now all of a sudden you're okay, well, we got to wait for this, we got to wait for this.
SPEAKER_01Well, we used to have a big problem with the lumber, right? Lumber, drywall. It was really, really hard to get your hands on lumber. And if you were getting your hands on lumber, you're paying three times the price. We've somewhat sorted out the lumber issue, but now we're we're behind in other things. Like you know, anything with technology is a little bit behind. Uh, you know, we're behind some some kitchen places are behind. It's just the little things that you need to finish your property, we're behind right now. And and uh, I mean, as a con an economy, we're behind.
SPEAKER_02Yeah, but it's not gonna get better either because now with people calling in sick with Omicron, you got to figure that if they're off for a week or two weeks, there's another delay now that and that's gonna go another month or two down the road.
SPEAKER_01Well, there's a positive report the other day that I saw online um that they believed through the wastewater, they believe we might have hit our peak with Omicron. So let's hope. I mean, uh no one really knows, but they think that with the wastewater we start we plateaued a little bit, which means we're starting to come down with Omicron, meaning most people have had it. So so I I I remember the first um the first very Delta and all that. Um I didn't know anyone who had COVID. And it's now I know tons of people who have had COVID, tons of people, including myself.
SPEAKER_02Yeah, very, very few in the original round, and now all of a sudden, yeah, everybody you know.
SPEAKER_03But I think a lot of people want it now. Like some people that I've talked to say I want it because now I'm immune for the next five or six months, or they say you've got the antibodies where you could travel anywhere. I know for me, it's like nah. I can avoid it, I want to avoid it if all possible. But you know, I've had friends like Paul that have had it, and it's really, you know, it's a little bit of it's like a flu bug, right, Paul, for a couple of days. Uh, for some for most people. I mean, for some people it's a little more serious, obviously. But for a lot of people, it's been like it's almost like three years ago when I used to get a flu and I was out for two days, and that's it. And now people stay home, where three years ago people would still tough it out and go out. Now people should stay home if they have any symptoms whatsoever.
SPEAKER_02Did you hear what he said there, Paul? What? Friends like Paul. Friends like Paul, yeah. I know.
SPEAKER_01Hey, hey, friends.
SPEAKER_03Hey, you agreed with me five times last week, so it's like, all right, I need some friends.
SPEAKER_01So I made the friendless, I made the friendless. You made the friendless, yep.
SPEAKER_02521 talk 5218255. We'll be right back.
SPEAKER_00We return to open house, the real estate and mortgage show on News Talk 580 CFRA.
SPEAKER_02Back with Paul Rushforth and trying to pull the title. Guys, are we making any headway with any of the uh promises from the government from the election with regards to real estate?
SPEAKER_03It's a good question. I mean, my uh my sources uh within the mortgage industry tell me that there's a few of them that are going to be introduced uh in short term. One of them being uh certainly one of the ones they talked about was uh you know, first-time home buyers being able to put money away in a tax-free account, which is tax-free savings in my opinion, but you know, up to $40,000 in something separate, uh, which is good. I think, I hope I cross my fingers they're gonna amend the first-time home buyer incentive program, where the reason it never took off is because the government wants the equity share in your house. But there's talk that they're gonna still do the loan. So what happens is you take a loan on the house, they'll give you 5% down uh to buy a home uh as a loan, grant loan, and you pay it back when you sell the house. But what they're talking about getting rid of is the equity share, so that it is an interest-free loan that you have to pay back when you either refinance the house or sell the house. So yeah, nobody wanted to be within miles of that equity there. Nothing. Nobody wants the government to own a percentage of your home. That makes no sense.
SPEAKER_01So why would the government do that for you? Why would they give an interest free loan? What's in it for like well?
SPEAKER_03I think that was uh, you know, if you remember, that was about six months before the election, and of course they came out with it, and it was just a way to get votes for young Canadians. And then when they came out with it just before the election, with all the rules and regulations behind it, it was kind of a farce, but we were so deep into the election at that point that not a lot of uh people brought it up, and and nobody really knew that you know it was really a failure from a standpoint of equity. So we had a couple of clients that took advantage of it and they refinanced their house and paid it back uh last year because they didn't want the government to benefit even more from uh price increases. So um, so that's their I mean there's talk about the CMHC slash default insured premiums coming down by 20 or 25 percent. That'll be good for first-time home buyers. They're talking about increasing the um, and I think that this one will go through uh and they're gonna review it on an annual basis. So, right now, if you buy a house for over a million dollars, you have to have 20% down. It cannot be default insured. They're talking about bumping that to 1.25 across the board and then reviewing it on an annual basis. So that's good. You know, the one I think that's gonna really hit real estate agents and the ones that realtors have had issues with is the blind bidding ban. Uh, so there's talk about that being instituted, which again has got some positives and negatives depending on which side of the fence you're on. If you're a buyer, it's kind of nice not to be in blind bidding because in some cases you're outbidding yourself, which kind of sucks. I mean, why do you want to outbid yourself when it's blind? But you know, on the vendor side, it's like, hey, if I can get more for my money or for my house, then why not take a chance at it? So I think that that's there. But the one thing about that other part of it is the home inspection's going to be mandatory, it sounds like, which would which would be absolutely incredible, I think, for um, again, some of our clients, and I think you probably got a few, Paul, that you know, bought the house without a home inspection and then found some issues once they move in, and uh, some of them costly issues, and that's unfair to a buyer. So I think a home inspection being mandatory is absolutely on the table and will likely be passed sooner rather than later.
SPEAKER_01Yeah, I don't I don't mind that one at all. Um, you know, we we I we did see through this pandemic when home inspections were a thing of the past. Uh, we saw a lot of people who got uh got stung when they moved into their house. So I it's not a bad idea to have a home inspection mandatory. It's obviously good for the home inspectors who have been hit super hard through this pandemic. Um and the other one about the blind bidding, like you said, Frank, there's some positives and there's some negatives. I mean, you know, uh for a buyer, absolutely. I'd want to know if I'm overbidding someone by $50,000. Uh, but you know, on the sell side, you're like you mentioned, it's it's it kind of sucks on the sell side because hey, if I can get an extra $50,000 for my house, perfect, I'll take it.
SPEAKER_02But logistically, how would that work, Paul? Would that have to be a formal offer each time?
SPEAKER_01Well, that we do not know. I mean, is it up to me as the listing agent to go back to you and say, hey, Frank, Steve's offer is $510, do you want to go higher? And then, oh, Steve, Frank says $515, you want to go higher? Who knows what the logistics behind that are? There's gonna have to be some sort of paperwork form, uh, some something in writing saying that you're going to a different price, uh, but that's that's unknown as of now.
SPEAKER_02Um Yeah, otherwise it's otherwise it's hearsay, right?
SPEAKER_01Well, it's absolutely hearsay. And you know, I would like to think all the agents are ethical, which I believe they are. And you know, I'd hate to see someone not all.
SPEAKER_02There's always I don't know. You know, like any business, there's always going to be somebody.
SPEAKER_01Well, I I got my hand slapped once, so I'm not gonna comment on that.
SPEAKER_02No, no, but I I'll comment on it, you know. Like not it, I mean it's I'm talking about every business. Every business has got bad apples, so I just I think you'd probably have to put it into a formal offer, but how many times would that go back and forth then?
SPEAKER_01It would be painful if we had to put it in a formal offer. It'd be absolutely painful. Uh, hopefully there'd be some sort of something we can do to make it a lot less painful, but but you're right. I I I would hope that you know everyone was ethical enough to to be honest and tell the truth and you know do the right thing, and which I believe would happen. Uh but yeah, there it it can it couldn't be a formal offer every time. That would just be painful.
SPEAKER_02So unless it's a zoom call, right? Or or maybe I guess what happens is whoever whoever you're working for will say, look, here's my maximum, and then maybe it's up to you to negotiate step by step as you go up.
SPEAKER_01Yeah, not a not a bad idea. There's there's a thing right now called that that it's called an escalation clause, which is frowned upon. It's not legal. I mean, it's not illegal, but it's frowned upon in the real estate industry. And what the escalation clause is, is basically saying, um, you know, I I will outbid the top offer by X amount of $1,000 to a max of this. The problem with that is as a listing agent, now you know what their max is, right? So that that's the big negative. But but there is such a thing as an escalation clause. I've seen it used, uh not used very often, and it's pretty much frowned upon by most brokerages, uh, but it is out there. You know, uh I'll the house is listed at you know $500,000. My client will go, will beat every offer by $5,000 to a max of $550,000, you know. Um, but it's you know, through this pandemic, I thought when when the market was absolutely insane, I thought it would be something that was was was prominent, but it wasn't. Um, but it is there. It is there.
SPEAKER_03Any other different than builders, right? You go in to see a builder and you know what the price is and you bid and that's it. And I think the government likes that open forum where you know exactly what you're gonna pay for your biggest asset you're ever gonna buy. And I think that's what they're looking for on the resale market. So, hey, quick question for you guys Do you know how many immigrants the uh uh the government of Canada is expecting to admit in 2022? What do you think?
SPEAKER_01I'm I'm gonna say uh usually there's to Canada or where? To Canada, yeah. Usually there's about a quarter of a million uh immigrants coming to Canada every year. I'm gonna say Steve?
SPEAKER_02Yeah, I think I bet you there'll be more. I bet you there'll be 400,000.
SPEAKER_03Yeah. 411,000. Now, our hospitals are overrun. We don't have any housing supplies. So for anybody that says to me house prices are gonna come down, I said, in what magical world are we gonna allow 411,000 people to come into our country where we already have a housing supply shortage and they're gonna move in and uh uh come to our country. And where are they gonna live? It's gonna create a bigger housing crisis, in my opinion. And the problem with that is that it's not gonna level off. They can decrease default insurance, they can do whatever measures they want. At the end of the day, there's gonna be a supply and demand issue like there is right now, and it's gonna get worse. And even though interest rates go up, I still think the values of homes are gonna go crazy and maybe even more crazy. But at the same time, the rich get richer. If you're looking to help the lower class and the middle class, they failed because all this is gonna do, it's gonna open up the doors for the people who can are in a financial position to be able to buy more homes, investment properties. It's gonna open up the doors for them to continue to do so.
SPEAKER_02Agreed, Paul?
SPEAKER_01I do. I do.
SPEAKER_03I think we get tired of hearing that, eh, Paul?
SPEAKER_01Ah, you know. As much as much as like feeling that we're gonna be able to do it. My friend, my friend.
SPEAKER_02Yes, now that we're I'm trying to make it easier for you, Paul. I'm agreeing for you on your behalf so that you don't actually have to say the words.
SPEAKER_01Well, I can now. Now that we're friends, I can't. Oh, that's right. Yes. Yeah.
SPEAKER_02521 Talk 5218255 will be back after this.
SPEAKER_00We return to open house, the real estate and mortgage show on News Talk 588. CFRA.
SPEAKER_02Welcome back with Frank DiPolitzano and Paul Rushforth. Well, the big question, Frank, these days is it still, do I lock in?
SPEAKER_03No question you lock in. I mean, right now we're trending upwards. If you have the opportunity to lock in or early renew your mortgage and you want to go into a fixed, I would say that, you know, you want to inquire with your current uh mortgage holder to see what the penalty is, to see whether it's worthwhile. And, you know, don't get caught up by the penalty number, but rather if you believe that interest rates will go up, and listen, they're talking about as much as you're talking about five, you know, Royal Bank is the worst at five increases of prime this year. Even they predict that fixed rates will only go up by a half a percentage point because the bond market's already priced in for some of these increases. So they don't believe that the fixed rates will go up as hot as much as the prime rate. Very similar to what we saw last year, where fixed rates went up almost one percentage point, but prime didn't do anything. So uh, you know, it's already been priced in. So, you know, if you're in a fixed rate mortgage and you want to lock in, uh, you'll probably be by the end of the year, we'll be in the uh low to mid-threes when it comes to a five-year fix. Uh, but on the variable side, I mean, you're still getting prime minus one, and we've got a couple of lenders of prime minus one point two, one point three. So therefore, you know, if prime went up a one and a quarter percent, you know, you're still going to be in the two and a half percent range when it comes to a variable rate mortgage, so not that bad.
SPEAKER_01I think what Frank, I think what Steve was asking, if you were in a variable, would you lock into a fix now? Which the answer is I said it absolutely not.
SPEAKER_03Well, I I wouldn't just because you're giving up, likely, depending on on what variable you're in. I mean, if somebody's in a variable of prime minus a half, well, they're at 1.95 and you're locking in at two and three quarters, maybe. So for the sake of three quarters of a percentage point, not that bad. Uh but if you're at prime minus one, prime minus one point one, one point two, you're in the one and a quarter to one point four percent range and giving up you know one and a quarter percent now to lock in. The only reason that I would ever do it is if I thought that there would be five prime rate increases this year and then three or four more the year after. If that were to happen, then that might sway me to lock in. But realistically, can this economy handle before the pandemic? We were running on all cylinders. The prime rate was at 3.95%, and we were running on all cylinders before the pandemic hit. So even if we got back to there, if you're at 1.1 below prime, you're still at 2.85, which is pretty similar to where the five-year fixed rate is now. So why not take the extra year or two of that lower rate and uh and take advantage of it by saving some money?
SPEAKER_02And if you don't lock in now, you're writing it out, right?
SPEAKER_03I you know, I think when you take a variable rate mortgage in many cases, you have to be ready to write it out. It's not about timing the market. The only way that you can time the market on a variable is if rates were trending downwards. Then you can try and time the market. But, you know, a lot of people do not think that uh fixed rates are coming down anytime soon. So if you're just trying to time the market, then lock in now. Because the likelihood of fixed rates coming down, unless we get another variant which shuts down the economy entirely, the likelihood is pretty slim of that happening. So I would say that if you're looking to time the market, lock in now. Convert your variable to a fixed now. But if you're with you know willing to just go with the variable for for uh until the end of your term, why not do it? Because you're you've already been way ahead in the last you know 20 months or so, yeah, and you're likely going to be ahead for the next 12 to 18 to 20 months again. So uh write it out is what I would say. If anything, increase your payments if you really want to just you know tackle it even quicker.
SPEAKER_02And what about if you're getting a mortgage today? Which way would you go?
SPEAKER_03Again, I mean I I I would go variable, but again, I mean, if you're a really nervous, nervous person that just is it's gonna keep you up at nighttime, then take the fix. Listen, like Paul. Getting a five-year fix, yeah, get listen, getting a five-year fix at less than three percent is still good. Let's not kid ourselves. Yeah, we've been spoiled a little bit over the last two years by you know reaching as low as one and a half percent a year ago for a five-year fix. But the reality is that anything below three percent is still acceptable and it's still well below you know his history number, historic numbers. So why not? Like, like if you're nervous, it's gonna keep you up at nighttime, take the fixed and you're set for the next five years. But if you're looking to take advantage of you know the lower rates today, then take a variable, but be prepared to write out the variable for the entire five-year term because the likelihood of you converting it to a fix later on is probably slim.
SPEAKER_01And what's your so be comfortable with higher payments? Just know that, right?
SPEAKER_03Well, if you set them higher to begin with now, uh, you know, if you set them like you took a five-year fix, but you take the variable, you've got that extra money going towards your principal, and as prime rate goes up, it's not impacting your payment. Then that's what keeps people up at night, usually, is oh my gosh, my payment gonna go up. Listen, the payment's not gonna go up that much. So, you know, let's call a spade a spade. We're not talking about your payment's gonna go up a thousand dollars. Your payment will likely go up twenty-five, thirty, thirty-five, forty dollars per quarter percent increase. So But you're still qualifying at five and a quarter now, right? Yeah, and and well, that's the fallback, right? The you know, the positive part about the stress is that clients are qualifying at five and a quarter percent. And even uh seven months ago they were qualifying at 4.79%, so well above what they're paying on their mortgage. But again, clients look at what their payment is. They don't ask about the qualifying. The qualifying is all about qualifying. They look at what the payments are, and if and if interest rates were to go up one percentage point, for most people, you know, even though they qualified for it, it doesn't matter. It's what happens in their real life, and now with inflation everywhere and groceries going up and everything else, they have maybe less money to uh to be able to afford, you know, mortgage rates going up as well.
SPEAKER_02Are you starting to see people sniffing around more now, Paul, with worried about rates going up and wanting to get into a house sooner than later?
SPEAKER_01Uh a little bit, yeah. And there there was an article uh a couple weeks ago saying how you know rates are gonna start to skyrocket. Now's the time to get into a house. There's no inventory, which is gonna put more pressure on the pricing. And we're starting to see a little bit of it. I mean, what people don't realize is the rates have gone up almost 1% over the last three or four months. And and you know, they're really not a lot of people felt that. But if they go up another 1%, you're gonna see people feeling that. Because, like I mentioned last week, every 1% is 10% buying power. So you're losing your buying power. So if you're someone who's somewhat on the fence or being able to afford it, uh, you're really close, and it goes up another 1%, you lose 10% of your buying power, you you may not be able to afford a house anymore. So that's why we're saying get in now while you can, if you can find something. That's the only problem.
SPEAKER_02And not only that, your mortgage is cheaper then for the next five years as well. You know, you're paying less for the next five years. That adds up to a couple of bucks.
SPEAKER_01It sure does. It sure does. And and if what what I think is going to happen to house prices, you want to get in right now. I mean, I I do see us, we've gone up 42% in the last two years. 42%. Uh, and I and I don't see us uh do I see us going up another 20% this year? No. But do I see us going up, you know, six to ten percent? Yes, yes, so get in now while you can.
SPEAKER_02What's going on in what's going on in Kingston? They're like through the roof in Kingston. They're well my their prices have gone crazy.
SPEAKER_01My daughter. My daughter's school in Kingston and at Queens, and I always told myself, when my kids go to university, I am buying a place, I'm not wasting money on rent. So I went down to look at some properties in Kingston, and I was looking at, you know, three, four, five bedroom properties in the student ghetto. They were, if I could find something for under a million, I was lucky. Wow. And they were shacks, like disgusting, like typical student ghetto, right? Yeah, and so I said to myself, do I really want to spend a million dollars on a rundown property that the kids are gonna trash? I said, you know what? No, I'll pay rent. Why not? So I didn't do it, but no, the prices in Kingston are through the roof.
SPEAKER_02They must have even less inventory than we do.
SPEAKER_01Um, I don't know, but uh, I know they're they're they probably do, to be honest with you. I mean, it's a huge student town, too, right? So there's a lot of rentals there, tons of investment properties there.
SPEAKER_02And are you guys both seeing people still looking in the outskirts?
SPEAKER_01Oh, yeah. Yeah, yeah. It's more affordable. Um, lots of builders out there now. I mean, you you look at uh, you know, some of the outskirts uh communities, and you used to have sort of like used to have small mom and pop builders out there. Now you're seeing some of the major players out there, you know, you're seeing some big, big builders building lots and lots and lots of track homes. Um, and it's just more affordable right now. So people are while they're working from home are are moving to the outskirts. And let's be honest, there's some my son plays hockey, and in in his league, there's a lot of he's he plays out in a lot of outskirt towns. And I go out there and I'm like, I can see myself living out here. Like it's it's it's cute, it's quaint. Yeah, they have a lot of amenities, they have the major shops. I mean, I always told myself, if you have a Starbucks, you've made it, right? If you have a Starbucks, you've made it, or a Home Depot, you've made it or a Walmart and a McDonald's. Yeah, yeah. And there's a lot of communities in the outskirts that when my son plays and he's got to be there an hour before his game, I'm like, no problem. I'll go have a coffee or a beer or something at all these different establishments when they're open. Um, and uh it's a lot of fun.
SPEAKER_02So how far are people willing to move out now?
SPEAKER_01Um, we're seeing people who will move out sometimes within half an hour of the city. Um, but that's Canada. I'm talking about Well, no, I mean half an hour of let's say West. Yeah. Half an hour of Canada. So we're seeing people to go to Armprior and Carlton Place and um, you know, Mississippi Mills and all those areas. And out east, we're seeing people who are going out to Lamoges quite a bit, Embraham, uh, Rockland. Rockland's a big draw right now, too, because it's it's just so close. I mean, it's fifty 15 to 17 minutes from Orleans, uh, but it has everything out there, too. One of my favorite communities, to be honest with you, two two of my favorite places are Armprior and Carleton Place. Awesome little communities.
SPEAKER_02Yeah. And Kempville's grown like crazy too.
SPEAKER_01Kempville's, I consider Kempville more like the city now. It's grown crazy. Yeah. Yeah, it's more like the city.
SPEAKER_02And Stittsville's still getting hurt by Frank living there.
SPEAKER_01Well, yeah, yeah. That area is really getting crushed because of Frank. You know, but but you know what? Once he moves out, I have a feeling that area's gonna fly. Look out.
SPEAKER_02Don't sell your house. Just sell one of your kitchens, Frank.
SPEAKER_01Yes, exactly.
SPEAKER_02521 talk 521-8255, be right back.
SPEAKER_00We return to Open House, the real estate and mortgage show on News Talk 580 CFRA. Welcome back.
SPEAKER_02Oh, what are you looking for when you're looking at homes this time of the year? Anything different and what you're looking to avoid or well, you know what?
SPEAKER_01You need a very, very, very strong agent, uh, salesperson when you're when you're buying a house nowadays, because you need to look into a lot of things. You mentioned earlier in the show about you know all this snow coming and snow on the roofs and stuff like that. You got to ask those diligent questions. How old is that roof? Um, you know, and if you know that the um if you know that the roof is uh an older roof, you better dig into those, you know, are they turning? Are the shingles turning? If it's anything, especially a home that's a newer home, the builders put the crappiest shingles on them. So like it could be seven or eight years and they start to turn. So just make sure you're doing your due diligence, you're asking the right questions. You want to look at the age of the furnace. Is it warm in there? Is the furnace sufficient?
SPEAKER_02Um, I guess you could sure tell if a house is sealed though, eh? On days like this, make sure that you know the windows are good. You'll know as soon as you walk in today. You'll know. You'll know.
SPEAKER_01You can just stand by the door and you can feel a breeze. If you're standing by the windows and you can feel a breeze, are the seals broken? Are they fogging up? Um, there's so many things that you need to look for in winter when you're buying the property. Uh, here's a big one is the air conditioning working? Because you can't test the air conditioning in the winter. So you need to ask those questions. How old is the air conditioning? Was it working? You know, if you can put a clause in there just saying about the air conditioning. There's so many things in the winter that that you can you could actually hide with your house. Like if you have a terrible yard, crappy yard, bad grass, weeds everywhere, you can hide that, roofs you can hide. There's so many things you can hide that, you know, you hope people don't do that, but you actually can. And so you need an agent who's gonna ask those really strong, diligent questions and get a lot of follow-up on those questions.
SPEAKER_02Makes an inspection more important too, eh, this time of year. Things you can it does.
SPEAKER_01Yeah, it does because the inspectors will be able to test for little things like even humidity. Uh, is there any leaks behind the walls? Is there any humidity? Uh, the only thing they can't test, obviously, is the air conditioner, uh, but they can test everything else. Um, and it's it's I mean, if you if you can, if you're not in a bidding warrant, you can get an inspection in there, a strong possibility in winter time. Yeah. Because it's so hot, it's so easy to hide things.
SPEAKER_02Air conditioning, though, the you most people will assign saying that it was working, right?
SPEAKER_01Well, it's so I bought a house a long time ago for a flip, and I asked the people, are you know the air conditioning 16, 17 years old? Does it work? They said, Oh, yeah, yeah, it works. And come spring, I went to turn on the air conditioning and it wasn't working. So, what do I do? Do I replace the air conditioning or do I try to have a legal battle and for $4,000? Do I try to have that legal battle, which for all intents and purposes, they said it was working. Maybe it was working and something happened over the winter, and maybe it was my fault. I don't know. So it's hard to go back on that afterwards to try to sue someone two or three months later and saying it wasn't working because who knows when it stopped working. Frank?
SPEAKER_03Hey, Paul, I've got uh I've got three or four lenders that uh when you buy a house, what they'll do is they'll give you free uh insurance, and it's an insurance policy that covers you against heating, electrical, um, air conditioning, and plumbing. So if anything goes wrong with that, they actually send somebody to fix it for a big cost of 50 bucks, an administrative cost of 50 bucks for the first year. And if the air conditioning is not working, they'll fix it for you. And if it needs replacing, up to 10,000 bucks, they'll replace it. So some of the lenders we choose, some of the lenders we choose specifically, because you know, we'll have we'll ask the question to clients like is it an older house? How's the heater? How's the furnace? How's the air conditioner? Might be worth it to go with this lender, even though the rate's the same. Let's go with this lender because they'll give you this free policy for the first year. Uh, and one of them cut it down to six months, but generally it's a year for most of them. And even if it's six months after that, like it's one of these that it's about 18 bucks a month to keep this policy in place. So it's not bad at all.
SPEAKER_01Yeah, that's called that's called a uh warranty wrap.
SPEAKER_03Home warranty.
SPEAKER_01Home warranty. Home warranty wrap. And uh yeah, there's there there are some programs out there like that where it's and it's not terribly expensive. I was I was looking to be the exclusive guy in Ottawa. They approached me about being the exclusive guy in Ottawa carrying these wraps, but the price was astronomical and it was just not worth it for me. But it's it's um you know, I think it's a couple hundred bucks, a couple two ninety nine, I think.
SPEAKER_03No, no, the one that we have is 18 bucks, uh 18 bucks a month, the one that most lenders offer.
SPEAKER_0118 bucks a month. That's that's that's worth the price. You know what?
SPEAKER_02If you're going if you're going into a deal with no conditions, why wouldn't you?
SPEAKER_01Yeah.
SPEAKER_02Agreed.
SPEAKER_01Yeah, it protects you. It protects you mainly because we've seen so many issues. Like one thing, too, is is another big one in winter, Steve, is pools. Um you want proof that that was professionally closed. And when you take possession of the property, a lot of agents forget to put this clause in there. But when you take possession of the property, let's say you're taking possession in June. Well, you want to make sure that pool is professionally opened as well, showing receipts and all that kind of stuff. Um, you don't want, you know, uh Joe Homeowner opening his own pool, even though he might have done it for years. You want a professional to open that pool. And as a seller, you want a professional to open that pool too, just for warranty issues. Like you want to make sure that you have a professional opening that pool. So another big one I as I totally forgot is pools in wintertime.
SPEAKER_02You well, and you probably want the same company to open it that closed it. So there's no excuses, right?
SPEAKER_01No excuses. No excuses. Yeah, absolutely. And and and a lot of times that's missed in offers, and that's a that's a big miss because if you take, let's say you take possession of your pool in in early April when the pool isn't open yet, you go to open that pool in in May and you find out that uh half the stuff isn't working, there's a problem there. So you want to make sure that it's it's professionally open and professionally closed.
SPEAKER_02Does that insurance cover that too, Frank, or not?
SPEAKER_01No.
SPEAKER_03Uh pool, no. The pool's totally on your own. I mean, this specifically covers plumbing electrical and heating are the three big ones that it covers uh heating slash air conditioning. So it's uh again, it's a great policy to have, and I've had a number of clients that have used it and called me and said, Frank, man, that saved us a couple of thousand bucks just by having that policy. And the best part is free. But now I think we're gonna continue with it. For 18 bucks a month, why not have it? Yeah, it seems like it's well worth it.
SPEAKER_02And there's a few lenders. A few lenders offering different ones, Frank?
SPEAKER_03Yeah, three or four lenders that give it uh uh for a year, a year and a half uh a year, and then there's one or two lenders that have scaled it back to six months, but well worth uh well worth for us to put the client with that lender just because uh to have that peace of mind, especially like Paul said, if you're buying without home inspection and not know what you're getting into, it really makes sense at that point.
SPEAKER_02Yeah, or an older home, right?
SPEAKER_03You got it.
SPEAKER_02So listen, uh, just before we go, at what point into your mortgage now, how deep into the five years is it worth reevaluating to see if you should get out of it?
SPEAKER_03Well, I think it's always worth reva uh reevaluating, but with your if you're with one of the major banks, the likelihood of uh you not being able to do it financially is is much higher just because the penalties, the way they calculate the penalty cost is significant uh cost for you. So if you're between two and four and a half years left on your term, it's probably gonna be very expensive. If you're in the last 18 to 24 months, still probably expensive. But once you get below 18 months and with the possibility of rates going up over the next 18 months and you want peace of mind for the next five years, you just gotta here's what I say to clients listen, you could never have imagined that your home would have gone up as much as it has the last two years. So if you want peace of mind on your mortgage and you have to pay a penalty that maybe seems unreasonable, but you're so much further ahead because the value in your home. And if you want that peace of mind of getting a better today's rates, then do it now. Pay that penalty, include it in your mortgage, and just move on for the next five years because the value of your home has gone up so much that you're way ahead of where you thought you would be at this stage uh during the mortgage.
SPEAKER_02And budget for house insurance this year looks like it's going up between five and ten percent, eh guys?
SPEAKER_01Oh my geez, that you know what? Everything's going up. See uh Frank mentioned earlier about the grocery store. I heard the grocery store now, and I can't believe the bills that I have at the grocery store. Everything's going up. It's crazy. I mean, I it's it's bound to happen, but I mean, everywhere you go now, everything is way more expensive.
SPEAKER_02I figure every year, if I eat less, whatever proof like if food goes up 5%, if I eat 5% less, you know, in another 10 years, I'll be really slim.
SPEAKER_03Hey, Steve, my fear is when I when we get back to the studio and I gotta buy breakfast, it's gonna be that much more expensive for me. So that's my fear.
SPEAKER_02Yeah, but you got you got 93 weeks of savings now.
SPEAKER_03You're right, you're right. That's the good part. Birthdays, Frank. Uh yeah, just uh uh one of our top agents, Josie Murto, celebrating her birthday. And of course, I want to say um uh I got a couple of people that wrote me and said, Hey, how's your dad doing? I heard on the radio. Uh my dad is finally home back. He had uh colon cancer, diagnosed with colon cancer, had emergency surgery, and uh proud to report that he's back home.
SPEAKER_01So that's amazing to hear. Yeah. Amazing to hear.
SPEAKER_03Awesome. Yeah.
SPEAKER_01And I know, I know I have a couple birthdays coming up, but I just I don't have it in front of me. I'm not like Frank. I don't prepare my birthday list before the show.
SPEAKER_02That's all Frank prepares.
SPEAKER_01But you know what, you know whose birthday is coming up in 12 days, and I won't be able to uh wish her a happy birthday because I'll be in Mexico. But you know whose birthday is? My daughter is turning 20. Wow.
SPEAKER_02Wow.
SPEAKER_0120 years old, my daughter.
SPEAKER_02Wow.
SPEAKER_01That just makes me old. Oh gosh.
SPEAKER_02So you were 14. I was you were 14 when you made her.
SPEAKER_03That white beard, that white beard makes you all nervous.
SPEAKER_01Uh this is my hairdresser says this is platinum blonde.
SPEAKER_03Yeah, you you go with that.
SPEAKER_02I like to call them highlights.
SPEAKER_01That's what she tells me every time I give her a tip.
SPEAKER_02Yeah. And the bigger the tip, the darker the hair gets. Yes. Frank N at mortgage brokersauttawa.com, Paul at paulrushworth.com. Have a great week, gentlemen.
SPEAKER_03Have a great week, and please continue to support local businesses and charities all.