Wondering if now is the best time to get into the real estate market? In this episode, we discuss the housing and real estate trends for 2019 and beyond. We explore trends for mortgage rates, home types, if 2019 is still a good year to buy a home and expectations into the fall market.
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Hi everyone. I'm Karl. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips from home buying experts. And remember, if this is your first time on this channel and you want to get the latest strategies from the experts, hit the subscription button below. Hit the little notification bell so you don't miss [00:00:30] anything.
So today I'm joined by Kevin French, Kevin French, Realtor with RE/MAX and today the question we're going to answer is:
What are some of the housing and real estate trends for 2019?
Interest rates and mortgage rates
Kevin, maybe we start this off with in terms of maybe interest rates and mortgage rates.
What are you seeing in terms of the direction in 2019 and beyond?
Affordability is a pretty big issue. I think that the major concern is that when the government makes decisions, they make them federally, so it's across the country.
So they're trying to bandaid or fixed concerns over the Vancouver and [00:01:00] Toronto markets specifically, and then those new rules apply as a blanket to the entire country.
So the stress test has obviously slowed down the market overall, a lot less buyers in the market.
People are then weighing, well, if I could afford four hundred and now I can only afford three, maybe I'll just keep renting because they don't get what I want.
And then there's speculation that they're going to change the mortgage rules to be in the favor of the buyers.
Maybe that's from a 25 year amortization to a 30 year, or maybe it's assisting with the down payment in some way and that would make it so [00:01:30] that more buyers could potentially afford more or be more comfortable purchasing, but those aren't set in stone yet.
So because it's in the unknown, there's a few handful of buyers that are waiting on the sidelines.
Yeah, we also saw in the budget the first time home buyer incentive as well as I think they increased the amount you can take out from your RRSPs as well, right? So those kind of things are ...
Kevin French: Yeah, and that's withdrawing RSPs for your first time home purchase.
Karl Yeh: Yes.
There are taxes, so you don't have to pay taxes on the withdraw, but you do have to pay it back within 15 years. [00:02:00]
Most things have changed or they're planning on adjusting that, so it's a way to expedite your down payment if you did have that money set aside for retirement, and get you into a property sooner.
The increases in that would obviously make it so that your mortgage payments would go down and you'd have more equity in the property from day one.
Trends for the types of homes
Well, let's just move from finance to actual product types.
So for example, in my neighborhood, I'm starting to see a lot of duplexes starting to put up, right?
So it's like single family torn [00:02:30] down, duplex comes or duplex, duplex, duplex.
Is that something that's a trend generally, or is it more just because it's a neighborhood or something?
Kevin French: This must be inner city?
Karl Yeh: Yes, yes.
So that's infill development, which is throughout everywhere in the inner city, right?
That's basically the city turning a 50 foot lot into two homes or maybe four if they can fit a fourplex on there.
That's increasing density, and in Calgary there's great opportunity for small developers or [00:03:00] large developers if they're working in the infill game that they can purchase a property and then build too and make profit at it.
That's probably the biggest reason why there's an increase in infills and why there's a demand for them, but it also gives buyers the opportunity to purchase a brand new property that is in the area that they want, and if it's duplex, typically more affordable for them as well.
Other trends within what's being built is secondary suites [00:03:30] or the ability to have a revenue helper. Whether it's a mother-in-law suite or a family member's going to live there, we're seeing a change in the city's development permit.
So in new areas, they're ending up new zoning and new regulations that allow for that to be legally included. Then the builders are building that, and then of course that gives the person the opportunity to live on the first and second level.
Then have somebody else live in the basement and rented out completely legally.
Are single family homes still most desired or are other home type becoming more popular?
Is the popularity of of [00:04:00] a specific home type, like is there something bucking the trend, or is it still single family homes? There's the city and people increasing density, so is there multi-families or is it still single family, still the big driver in the market?
If price point didn't matter, it would be single family. Since it does, it drives some single family purchasers in a duplex.
Karl Yeh: Got it.
Single-family has weathered the storm the best, so it's still the best [00:04:30] purchase, overall. I don't think that we're going to see this shift for a longer period of time of the needs of the millennials or other generations needing a different lifestyle.
In terms of condo living, I think we'll see a shift in needing less space, so not needing a 2,400 square foot duplex over three levels for two people or for three people or four people.
That's a lot of square footage, so there's a handful of people that have sold homes with [00:05:00] me in the last year that have sold their homes simply because it's just too much space. They don't go into this room, they aren't going to that room.
We barely go into the basement, so why do we have this? They're downsizing, and they're in their thirties.
Karl Yeh: Yeah. So it's not like your typical downsize where it's like, "Oh, I need to reduce because all my children are out."
Kevin French: Exactly.
Karl Yeh: It's like, "I don't need to use every single room, so why do I need to ..."
Kevin French: Yeah, right. And with that, they're often decreasing their mortgage.
Yes, yes, of course. And in your opinion then, is 2019 is still, [00:05:30] this may be a loaded question, but
Is 2019 a good year to buy a home?
It's an excellent year to buy a home. I've been hesitant in saying that it's a good year to buy a home for the last four years.
I'm more confident in it now because the Calgary Real Estate Board puts out statistics every year and they make predictions on what's going to happen the following year.
Those predictions are pretty accurate.
This year, I believe it's a 2.45% decrease in home prices. That was expected be seen in the first half of the year, more so than the last [00:06:00] half of the year. Now that we've had the election, of course, that has impacted things.
It's kind of hard to pinpoint it because we just had the spring market or we're in the middle of the spring market at the same time as having the election and the new control. The market's extremely busy right now. Is it because it's spring?
Is it because of the change? But speculation is that it's given a lot more confidence to the market overall.
And how about there's a spring market and there's [00:06:30] a fall market, right?
Kevin French: There is.
Expectations in the fall market
What are your expectations in terms of the fall market?
Do you feel like there is like a steady increase in terms of buyers, or are we still in that market where people are still hesitant just a little bit?
It should probably be similar to the spring.
People will be hesitant still, there's still a lot of people that are trying to time the market and see where the bottom is and then purchase them.
There's been a lot less conversation though now in 2019 about doing that than there has been in the last three years. In the last [00:07:00] three years, I think it might go down in the next six months. I'm going wait. I think it might go down.
The reality is the amount that Calgary has continued to decrease, and I'll talk specifically to the detached side.
The amount that the market's continued to decrease, if you were renting a comparable home, you would still be better off to purchase.
If you purchased in 2015, 16, 17, 18, that detached home, that's 2,000 square feet, say, the cost to rent that property and then what you'd be paying in a mortgage and building an equity, the offset's pretty [00:07:30] much the same.
CMHC will just get the property you want, because once it turns around, you'll beginning equity. Unless you could time it perfectly.
Karl Yeh: Which I don't think anyone can.
Kevin French: No.
Karl Yeh: Because there's always another bottle, right?
Kevin French: Yeah.
Yeah. And remember, if you want to know more about the advantages of owning versus renting, check out our video above in the description below.
So Kevin, do you want anything else in terms of housing trends for 2019?
I would just encourage people to purchase [00:08:00] what they can afford and not what they think they need within your means and buy the property that's the right size for you.
Don't overspend and buy a place with three bedrooms that you'll never enter.
And if you want to know more about home buying and the home buying process, watch these videos here and don't forget to hit the subscribe button and the notification bell to keep learning from the experts. Thanks for watching, and we'll catch you in our next video.
Let us know if you have additional home buying related questions that we can answer by submitting them in the comments section below.
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About Kevin French:
Kevin French is a Calgary and area based realtor with a client focus. He specializes in a stress free home selling process that is built on customer service. Understanding that your home is one of your largest investments, Kevin employs a marketing mix that ensures you will maximize returns on your home sale. Diligent market research coupled with an in-depth understanding of the Calgary and area markets, allows Kevin to pinpoint the perfect price for your home.
In addition to perfect pricing, Kevin offers a suite of additional services such as professional photography and an interior designer to ensure your home shows its best. Kevin French has become a trusted name in real estate because he is results driven and works closely with his clients to produce the best results.