In March, our very own John Zinati, an expert real estate lawyer in Toronto, sat down with the CEO of Veritas Investment Research, Anthony Scilipoti, to discuss the current real estate market. As a real estate closing lawyer in Toronto with decades of experience, John is uniquely positioned to educate us on what the market is telling us right now.
The interview was part of the Veritas Fact-Finding series. Designed in the wake of the COVID-19 pandemic as a way to find the truth about investment opportunities and pitfalls, this series speaks with industry professionals on the ground to better understand how the pandemic will affect our life and our investments.
Here are some of the key points John and Anthony discussed.
What is the mentality of buyers/sellers/financiers in today’s market?
They want to get in the market. It looks like it’s going up and up and up and they don’t want to be priced out as it continues to grow.
They’re also more experienced. They know what they’re doing. There aren’t many people who don’t understand how real estate works. They’re looking at the market and they’re afraid of missing out. They think that if they wait, they’ll never be able to get in, as prices just keep climbing.
Another thing is that they’re more willing to accept condos over houses, which is great news for the market, as it gives much more room to grow.
How does the past year compare with the previous 35 years?
Last year started strong, but then there was a bit of lull as the pandemic ramped up. But come September when some of the restrictions began to lift, the market became unstoppable.
It’s surprising how busy it’s been despite what’s going on in the world.
What’s driving the market is income and interest rates. Most people who were in the market didn’t really lose their income; instead, they were able to actually save money during the pandemic. And rates have fallen. So, income hasn’t been impacted and rates are now lower than they’ve been in a while.
Where is the financing coming from now, and how has that changed from previous years?
The vast majority is coming from banks. However, over the last three to five years, more and more small lenders and the B lenders have also been lending. Meanwhile, MICs (mortgage investment corporations) account for about 5% to 10% and private lenders account for roughly 2% to 3% of mortgages.
What is happening in the condo market and housing market now?
At first people wanted houses because houses have more space, and with the pandemic, people would be spending more time at home.
Now condos are on the rise.
Here’s what’s happening: sellers don’t want any conditions on the offer. Normally when a person buys a condo, they want to look at the status certificate, check the finances, check for liens—the lawyer does that.
Typically, when a buyer puts in an offer, they make it conditional on the lawyer’s review of the status certificate and they get a chance to back out if the lawyer finds a problem. Sellers are saying no; buyers need to come in firm if they want to buy.
So, they’re not giving condition on status review. Instead, they are getting a good real estate lawyer in Toronto to review it before the offer stage.
What key metrics are you watching to monitor the health of the housing market?
Too much excitement and these unconditional offers are worrisome. But if COVID-19 didn’t stop this market, not much else will. Interest rates have to go up and incomes have to go down.
And prices can only go so high. But what will happen is they’ll redevelop the land and build condos, making it more affordable. This will be a check on the prices so that growth can continue.
Contact an Expert Home Buying Lawyer in Toronto
As any good real estate lawyer in Toronto will tell you, there are enticing opportunities on the market right now.
At Zinati Kay – Real Estate Lawyers, we have over 50 years of experience helping home buyers and sellers in the Greater Toronto Area. Over that time, we’ve closed over 20,000 real estate transactions! We can help you too!
If you want to see the full interview with our expert home-buyer lawyer in Toronto, John Zinati, and hear his analysis of the market, see the video here.