How Good Is This Current Market for Investments from Both the Investors & Consumer Perspective?

SYED MAHMOOD NAQVI Vice President | MB Enterprises

As we all know, the Canadian Real Estate market is currently undergoing chaos regarding whether people must buy or sell. Undoubtedly, the market is currently undergoing a confused state & people's decision is overshadowed due to the market's unexpected behaviours. This confusion, regarded as inflation or recession, is obviously causing some disturbances regarding the investor's buying & selling decisions.

THE INTEREST RATES ARE ON A HIGH:

The main issue is that the interest rate is high. Due to increased interest rates, the affordability levels of people have become low, i.e. they can't afford the buying decision. On the other hand, if we see at the buying market, the prices have been reduced by a significant margin, i.e. 30 % to 40% reductions. The property that was $1.7M now is easily available to people in $1.1 M, range especially those who are property experts who have a know-how of the same, i.e. properties ups & downs.

It's not easy to earn $6000 after tax dollars in this country as most of us know, it's hard! How can someone spend their whole $6K on a mortgage? There are other living expenses for those who can afford $6K for the mortgage. He might also afford a good car. Therefore, the person should earn $10K after tax deductions to afford a $6K mortgage amount. However, in Canada, only a few people can earn a net income of $10K, i.e. after tax deductions.

We need to see more closely how to manage such a scenario best. The most important thing we need to see concerns our cash flow which will enable us to make a decision on whether we are first time buyer of an investor.

EXAMPLE OF A CASE SCENARIO:

Let's take an example: we looked at a home in the month of Jan. for $1.7M and now it's worth is $1.2M, i.e. we have a savings of $500,000. In January, the mortgage amount was $4K. Now it's $6K, i.e. $2K is the increased net expense. The market conditions, i.e., inflation or recession, will stay there for more years. Some experts say that it will be fine till the end of this month, while other experts have a different opinion & they think it will stay like this till the mid of 2024.

It will stay like this for two years, as one must take precautions and think in the long run.

The $2000 we pay extra each month, adds up to $24K for the year and for the two years, it will be $48K. Let's say that the growth doesn't happen according to my circumstances. If you research as everyone does regarding recession periods, you will see for yourself, i.e. all the property recessions you have seen in the past have a 3% to 5% growth rate. I am talking about the recession period in 2008, whether 2018 or 2022. Eventually, the market comes back as it has the tendency to come back & it improves according to previous market trends.

WHAT'S THE BEST ADVICE?

As an investor, you should make a 200% investment, as it's a very good market & if you won't invest now, when will you do it? People who fail don't do their math & don't do their calculations, which is very wrong, as they are more speculative.

Think like an investor, as an investor must think in the long run and think with a big heart. All you need is the right people, the right guidance, the right locations and enough capital to back you. Finally, the desired cash flow is always a plus.

If you can't cover the gap, you don't have to do it. If you can cover the gaps, 100% it's advisable to buy this time. Manage your cash flows, make buying decisions, & according to my expert advice, it's preferable to invest & in 2025, you shall earn money with the market with good returns.

AS AN INVESTOR:

The Mansoor Naqvi Team & The Royal LePage has the experience of 18 years in business together and we are experts with seven offices and 150+ agents working with one window operation. We provide all sorts of advice, including mortgage and inspections as well as home solutions to renovations & we do construction advice as well as we believe in teamwork.

Work with knowledgeable and experienced professionals, obviously, as decisions regarding homes are big decisions. Don't go to someone new. I am not discouraging new agents in the market or demotivating them. All I am doing is asking for the best & most professional guidance.

In our brokerage, you shall be getting consistent support & training with us, and you will be getting good leads. In a nutshell, it's a powerhouse system that we are running. Our support is for both the agent and the buyer.

CONSUMER'S PERSPECTIVE- 'THE FIRST-TIME BUYER’:

For the first-time buyer, it's a big decision. Don't get tentative, as everyone wants a big home equipped with a big kitchen. Just make the decisions according to your cash flow & your earnings. Your affordability is very important as a first-time buyer. A decision to invest more & not according to your earning will bother you later.

In a state of confusion, most people prefer not to buy. Instead, they make a decision to rent. It's also not advisable as they pay their equity to someone else. At least, buy a condo or a small home which is advisable according to your monthly cash flow. Do some calculations and some math & take the advice of experts & those who have been in the market for a long time.

We shall give you the best support & guidance & you will benefit from this.