LACKIE: Only recent homebuyers feeling crunch of rising interest rates

0

Article content

Holiday parties are back this year, baby.

Advertisement 2

Article content

And while the novelty of having somewhere to wear my party shoes again has yet to wear off, the cocktail party conversations remain the same as they ever were: the weather, holiday plans, upcoming travel and, of course, the real estate market.

Article content

This is Toronto, after all.

Would you believe me if I said there are people who, presumably in an effort to make benign small talk, ask me how the real estate market is and seem genuinely surprised to hear that things are rocky at the moment?

They indicate a vague awareness that interest rates are going up and slowing things down, but seem shocked to hear what that’s shaking out to mean in terms of the fall from February’s highs.

“It seems like things are sitting, huh?”

That was last night.

Advertisement 3

Article content

Confirms what I have long suspected:

Firstly, that Twitter bears very little resemblance to real life. Amen. Because, of course, if one were to extrapolate the state of things based on my (admittedly real estate heavy) Twitter feed alone, one would likely feel certain the world was ending.

And second, that unless you’re a recent buyer with a variable rate mortgage feeling the crunch of the rising rates, you’re probably busy living your life.

Your house may be worth substantially less than it might have been valued at last winter, but to you that was never real since even with the correction it’s likely still up substantially from what you paid.

Advertisement 4

Article content

Unless you’ve bought, sold or refinanced, that gain was entirely theoretical — you were living in your home, not tinkering with your net worth abacus in real time.

Based on what I can tell from a solid two weeks of mixing and mingling, the people who seem to be uncomfortably straddling the two worlds at the moment are the Boomers sitting with a substantial portion of their wealth tied up in their homes. For those whose retirement plans centred upon cashing out and downsizing, perhaps renting a nice bungalow somewhere, the outlook isn’t looking great.

RECOMMENDED VIDEO

We apologize, but this video has failed to load.

Now there’s an entirely uncertain timeline to contend with. We can’t be sure where the bottom is, when we might finally hit it, when the recovery might start to begin, and when, if ever, we might see prices like that again.

Advertisement 5

Article content

The rental market is tighter than it’s ever been, making the prospect of making a move both daunting and unappealing.

And to add a whole other layer of complexity to the situation, given how unaffordable the market has been for first-time homebuyers, the number of their parents who have pulled equity to help out with a downpayment is probably not surprising at this point. So we’re not actually just talking about people sitting on pots of illiquid gains — they’re also sitting on liabilities.

So the question is what should they do and when should they do it?

Of course, the answer is that I don’t know — it really depends.

But I will say that like seemingly all else in this period of uncertainty, kicking the can down the road and hoping things will miraculously improve in the spring doesn’t seem particularly promising.

Bah humbug indeed.

@brynnlackie

Advertisement 1

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Swift Telecast is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – swifttelecast.com. The content will be deleted within 24 hours.

Leave a comment