In a recent compelling interview on BNN Bloomberg, Cailey Heaps, the President and CEO of Heaps Estrin, shared her expert insights on the current real estate market. Speaking with Amanda Lang, Heaps delved into the intricacies of market trends, strategies for navigating the high-interest rate environment, and her predictions for the future of real estate. This post highlights the key points from this discussion, offering valuable insights for both buyers and sellers in today’s market. [Link to the full interview video]
Anticipating Interest Rate Changes in 2024
Cailey Heaps discussed the widespread anticipation of interest rate decreases in spring 2024. While some are hopeful for this shift to stimulate the market, Heaps advises caution and strategic planning, emphasizing the importance of understanding market dynamics
Strategies for Buyers in a High-Interest Rate Market
Despite current high-interest rates, Heaps suggests that the decrease in purchase prices may offer a unique opportunity for buyers. She explains how current conditions might actually enhance affordability and advises on the potential to renegotiate rates in the future.
Advice for Sellers in Today’s Market
Heaps also addressed the seller’s perspective, noting that certain segments of the market are still performing strongly. She emphasizes the importance of understanding the unique characteristics of each micro-market when selling.
Long-Term Outlook on Home Values
Dispelling fears of drastic price drops, Heaps predicts stability in home values. She attributes this to fundamental factors driving the Toronto market, such as immigration and low supply.
The Shift from Location to Timing
Highlighting a shift in real estate focus, Heaps notes that the adage of “location, location, location” has evolved to “timing, timing, timing,” reflecting new market dynamics.
Impact of Inflation and Mortgage Rates on Affordability
The interview also touched on how inflation and mortgage rates affect affordability. Heaps provides a perspective on how recent changes in inflation might influence buyer capabilities.
Cailey Heaps’ Predictions for 2024
Looking ahead, Heaps anticipates an easing of current market pressures by the second or third quarter of 2024, offering a ray of hope for both buyers and sellers.
Cailey Heaps’ insights offer a nuanced view of the current real estate landscape. Her expertise provides valuable guidance for navigating these challenging times. For those interested in the full depth of the discussion, we encourage you to watch the complete interview. [Link to the full interview video]
Amanda Lang: A lot of people aren’t just hoping rates don’t rise further. Some are now counting on rates to fall in the spring. Could that be a mistake? Cailey Heaps is President and CEO of Heaps Estrin, and thanks for being with us.
Cailey Heaps: Thank you for having me.
Amanda Lang: So, as somebody with a close eye on the real estate market like you, I’m curious, do you worry that people are actually looking ahead to that spring and thinking there’s some big windfall ahead, in other words, rates are coming down and the market improves markedly?
Cailey Heaps: It’s a very good question. So, I think that there are a lot of people in the market who are anticipating rates to fall around April or May, and then a rebound in the market. But I think there are different strategies that buyers can take in today’s market that we’re exploring with clients as well.
Amanda Lang: And what would some of those strategies be? I mean, rates are still high, and of course, let’s also put this in the context of renewals that are coming and the effect that might have on the overall housing market. What are you telling people about managing this period?
Cailey Heaps: Yeah, so I think there are two perspectives. For buyers who are getting into the marketplace, although rates are higher now, I think it’s really important to remember that that’s being offset by a reduction in purchase price. So, if you look at affordability, it’s actually many times, for many instances, more affordable to buy now, even with the higher rates. And then you can renegotiate your rates in a year or so. So, we’ve been looking at cost to carry with clients, and most of the time in that first-time buyer market, this is actually a good time to buy despite the higher interest rates. And then, looking at it from the other perspective, I mean, from the seller’s perspective, I think that there are segments of the market that are still performing well. And, you know, each market sort of operates in its own micro-market, so it’s difficult to give broad advice.
Amanda Lang: Yeah. But there are certainly strong areas in the industry still. We’ve just been talking about the fact that there are people out there who need value in their homes as part of a retirement plan, especially for older Canadians. We keep hearing it’s different now because of the supply-demand picture. Are you in a camp that would say home values will stay pretty solid, that they might get a little more affordable, they might get a little less, but in the next few years, say, we’re not going to see a drop off the cliff the way we might have decades ago?
Cailey Heaps: I would agree with that, Amanda. I don’t think we’re going to see drastic changes in pricing. Certainly, I don’t think we’re going to see drastic downward pressure on pricing. I think the fundamentals that drive the Toronto market still exist. So, immigration, low supply. So I don’t think we’ll see major drops. I think what’s perhaps slightly different in real estate that I’ve seen in my career is we always used to say location, location, location, and now really the focus is timing, timing, timing. One of the other factors, of course, is obviously the mortgage rate, the cost of carrying out is a big deal. Inflation also changed the affordability picture for a lot of people. They just didn’t have the same disposable income. Now that we see inflation backing off, what do you think that does to the kind of mindset around what people can afford?
Cailey Heaps: Well, I think this will be a very interesting holiday season to see what spending is like. I think it’s important to remember that people who qualified for mortgages in the last few years did so with a stress test. So, although it’s uncomfortable to pay the current interest rate, they were qualified based on higher rates. So I think it’s important for people to really try and stay in their houses, and that’s different advice than lots of people would give. But banks are being mandated to assist mortgage holders, and if they can hang on based on the preapproval about those former stress rates, things will ease up. Things will ease up within, I would say, certainly within the second or third quarter of 2024.
Amanda Lang: So good to have you for this, Cailey. Appreciate your time.
Cailey Heaps: Thank you so much for having me.
WATCH THE FULL INTERVIEW HERE
BNN Bloomberg is Canada’s Business News Network reporting on interest rates, inflation and the markets.