Why mortgage rate increases are unlikely to dampen buyer enthusiasm, how the Bank of Canada is contributing to it and more.
Yahoo Finance's Jessy Bains talks to housing analysts John Pasalis, Move Smartly lead contributor and Realosophy Realty President, and Vancouver Realtor Steve Saretsky about a range of topics:
- The latest numbers from CREA (Canadian Real Estate Association)
It was a record month in February with sales up 6.6% month-over-month and prices up 3.3%. Rates are incredibly low which creates anxiety amongst homebuyers to buy a home now. When people see prices rising up to 30% per year, many are pushing to buy due to 'Fear of Missing Out' (FOMO), creating an extremely competitive market.
- Are we in a bubble?
John discusses how the certain areas of the GTA are in a bubble, specifically with suburban houses. "If prices rise 30-40%, you're just rationalizing irrational exuberance," says John.
- Early signs of excess exuberance
The Bank of Canada doesn't seem too worried and sees early signs of excess exuberance. John thinks differently with prices way up in a lot of regions across the country. The market looks to be a lot hotter than it was a few years ago.
- Are investors jumping into the market?
Today the market feels more end-user driven. But over the past few months, more investors are coming into the market. There's a feedback loop that fuels more speculative buying, drawing in investors. John fears the Bank of Canada is actually fuelling the exuberance with their messaging.
- Bank of Canada rates remain unchanged for 2021
While interest rates remain unchanged, bond yields are starting to rise and fixed-mortgage rates were raised 10 basis points. John feels it won't have significant impact on the market. The momentum of FOMO will outdo rate hikes.
Click on the video above to watch the full interview.
John Pasalis is President of Realosophy Realty, an innovative residential real estate brokerage in Toronto. A leader in real estate analytics, Realosophy educates consumers at Realosophy.com and MoveSmartly.com and helps clients make better decisions when buying and selling a home.
A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).