Thanks to Alex Turko for inviting me to last night's 2024 Economic Update by Benjamin Tal, Deputy Chief Economist, CIBC World Markets Inc.
Key takeaways from 2024 forecasts:
1. Bad news is good news - there are always opportunity in the real estate market. Many are waiting for interest rates to drop to start/continue their house search. However, with lower interest rates comes more interest. More interest comes higher prices. There's no difference in your monthly payments for a $500,000 house with a 7% mortgage rate or a $600,000 house with a 5.5% mortgage interest rate. Marry the house, date the rate.
2. Now is the time to invest in real estate! We're experiencing record low inventories, but are starting to see increased demand. As such, when there's more demand than supply, the prices go up. If you've ever been interested in investing a real estate, now is the time!
3. Inflation is inevitable, but the target should be 3%. As we’re closing the gap on year over year inflation, the target from the Bank of Canada is 2% (but according to Benjamin, should be closer to 3-4%). As such, you need investments and need to be able to build your home equity to beat inflation. In this current market, real estate is one of the best investments you can make, as we’ve experienced an average return of 10.6%, beating targeting inflation numbers.
4. Interest rates are expected to drop in May/June - As per Ben Tal "In my opinion, the Bank of Canada is done raising mortgage rates". If you want to beat the rush of activity before the next rate announcement is scheduled (March 6), now is the time to buy.
5. The condo market is going to face some pressure in the short term - as more people are becoming more concerned with additional spending, people are trying to save as much as they can. This is hurting condos with higher monthly fees. Remember, bad news is good news, this means that there could be a great opportunity to find a condo for a great price!
6. We are currently in a housing recession - Again, opportunities are abound, especially for investors. Also, the fact that we're already in a recession, means that improvements are coming. There's nowhere to go but up!
7. The labour market is heating up - Remember when people were saying that "no one wants to work"? Well, now we're seeing the result of inflation battling, corporate profits lowering, and income demands increasing.
The main takeaways were that there are opportunities abound and that we are going to "get back to normal" in the next 3-6 months.
If you want to invest or buy, NOW is a great time for it.
Prices are expected to increase in May and June based on increased demand and expected interest rate cuts. So if you're considering moving, purchasing now and beating the rush, but then selling during the spring is the way to "win" at real estate.
Thanks again to the entire One London Group at CIBC Wood Gundy for putting on this amazing event!