John Pasalis, President and Broker of Realosophy Realty, lead contributor at Move Smartly, explains why we are at a very critical point in the market right now and what key trends all home buyers and sellers need to take into account to make the right real estate decisions.
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How would you predict real estate prices in upcoming months? Is it going to come down?
rates will comes down. As the economy tanks, the Fed needs higher rates now so they have something left in their bags of tricks to stimulate the economy. Stay calm,
The Bank of Canada needs to raise to 3.5 to 4%. Investors are pretty convinced this will happen by the end of 2022. The hyperinflation in the real estate industry in the past 20 years has brainwashed people into thinking what has happened in Canada is based on fundamentals and will never stop. Let's get real though. Canada saw a 297% increase in prices since 2005. Germany has seen 97% and the US has seen 66% increase overall.
The government kept telling everybody they will support real estate prices no matter what. You know what domestic and foreign investors and flipper heard? Pile in, you can't lose. And profits will end up through the roof and who cares when they aren't the bag holders. The bag holders are the people buying at any price thinking prices will keep skyrocketing forever.
Anyways, don't be a sucker, prices always lag interest rate increases and interest rates are still going up. And never in history has the BOC been able to have a soft landing from this kind of high overall inflation. So if you have to buy, use 2017 or 2018 prices as a point of guidance. A trading chartist would call those levels the first support level. Watch the volume. If volume is low, there's no support.
They should let ice cream top melt from the cone let people enjoy their excessive bidding war money
Real estate collapse has just begun.
Just wait until the Variable rate Mortgages reset with the trigger rates being hit on the next BOC rate rise. 100s of 1000s of foreclosures coming. Just like the US in 2007-2008.
@2:39 Prices go down because we have rapidly rising inflation – ha ha ha…. Good one
Thank you John for all you done! I am a big fan!
We are so over leveraged and in debt in Canada. Hold on tight. Real tight. This is getting greasy ( insert hair joke)…..
Banks have to throw the price of houses to ground 0 by increasing interest rate, to earn the money by starting afresh again
Greedy people will not go Scott free by throwing keys of houses. They have to pay to bank by selling their assets
High inflation in a short term 1-2 years is not so bad for the country.
Boc was irresponsible letting trudeau spend 900B .. and now being irresponsible raising rates too quickly.
I saw this coming months ago, sold at the peak, and moved to renting in a much more affordable market. Maximum capital preserved, zero debt, lower cost of living, full mobility, liquidity and agility to move when the markets turn…
Very high home prices directly contribute to high cost of living (hence to inflation).
I think for a long term policy prudence, BOC would like to hold the high interest rates for a while.. even after the inflation on paper returns to 2%.
That would also give them room to 'reduce the rates to neutral' in case they need to stimulate the economy amidst the recession.
Infact… BOC would love if the house prices come down to the level of current wages… instead of other way round… because otherwise it would trigger a chain reaction of wage price spiral…
Can you explain how exactly does war in Ukraine affect Gas prices in Canada?
So this is whats called a summer lull and prices will pick up again in the fall
In the 416 the Buyer asks : 1) Do I want to invest $200k Downpayment+ $50k closing costs in an asset that may not appreciate for years? 2) Do I want to spend $60k a year to live some place? (Mortgage+Tax+Utilities+ Up-keep) Those are after tax dollars, meaning that $100k gross income goes to your house annually. Sellers are looking backwards upset perhaps that they didn't get the property on the market last winter. Frustrated, they are now taking their listings off market. Perhaps the Sellers should first ask if the perfect storm of Zero rates, Covid, and Speculation, (which drove prices up 48% in two years) will return anytime soon. I doubt that it will.
Time for a haircut 💇🏻♂️
Thanks – good reflection – sounds accurate – you may inspire me to go into real estate – like your team up with your Vancouver colleague buddy Steve … have a Good Day …
– you need to brush your hair 🙂
Why didn't complain about the inflated housing prices in 2016, 2017, … 2021 if you always knew that it is bad?
Purchased this course but looks like it was originally a $50 as it says in the FAQs.
Just earlier this year you said you did not see any drop in housing prices and at that time inflation was still high and Canadians were heavily debt. You like all Realtors never thought rates would ever rise.
This was a very good explanation on on all 3 factors. 👍
Levelheaded reality. Good content as always, John.
We love you John!!! Great insight!
Not sure how many wealthy Asian immigrants will come here as our health care system crumbled/country frozen 7months a year and taxes insane….
Look at income to debt /housing cost ratio. Only so many wealthy immigrants you can trick into buying a million dollar dump in Brampton
History ALWAYS repeats itself……. unless you never study history
This guy is delusional again. First he blamed the drop in prices in foreign tax that had almost no impact in Vancouver or Toronto. Then he blames it on Russia Ukraine and inflation. He wake up in mid July that house prices is dropping after so many more than a month of dropping but never acknowledge of interest rates. Previously he said is because of supply. Never trust this clown. He is like a lagging indicator that always comes after months to acknowledge something. Even my son at 7 realized that demand created by low interest rates brings the price up. Now that rates more than double people dont qualify for these huge prices and will bring prices down. Him are Biden or Trudolf are delusional. Keep it up that Russia Ukraine war impacts everything. And yeah after another 1% rate increase will crash the house market in the next 3 months. Wake up noob
Your hair is amazing.
Absolutely helpful
Leveraged investors and homeowners are the reason why BofC will lower interest rates within 12 months. They will backstop these canadians
John, great lesson in economics! I was a banker a life time ago, and when rates go up, prices go down, and the forecasts are for more rate increases. It wasn't a surprise having rate increases here and in the U.S. It was forecasted last year that rates were going up in 2022. I had a couple investment properties owned over 10 years in Florida that I sold early this year because of the economic forecast. (super happy I'm out) I don't think the majority of the buying public understand the rate/price relationship. Too many individuals believe that these historically low rates are the norm. I lived in the 13% days of the early 90's, and will never forget.
Great hair but Viva Frei can't be beat although he is now living in Florida so technically you are number one hair hopper in Canadastan.
If you believe Canadian inflation is 8.1% I have a bridge for sale for you.
john…no haircut…looks very stylish..
This man needs a haircut.
Get a haircut
Yes, they are listened to BOC – Tiff 😥😥😥😥😥
Hopefully people rein in there debt.
There’s nothing protecting a home buyer Real estate agents / mortgage brokers making big Commissions from people overpaying
This market is going to be the exact opposite of the the smug no conditions BS blind bids frenzy. And I blame the realtor community for not standing up for the public interest. You lost a huge amount of professional credibility. Hudak is a complete dolt.
Many indebted individuals will soon be visiting the bankruptcy trustee!
BOC uses Milton Friedman's monetary policy theory with increasing interest rates to possibly cause a recession which will lower prices. The PM giving free money to the tune of over 600 billion dollars has caused prices to sky rocket out of control. There is also too much leverage because of the cheap money available through low interest rates. Good luck to us all!
I agree with you John. The excess leverage will destroy many home buyer. The low interest rates gave a false "illusion of wealth".