You may have noticed the increased demand in the detached housing and the townhouse markets and now the condo market, in the last year.
Many of us realised that if we were going to be locked in our rooms for more than the couple of months we originally thought, we had better find nicer spaces, ones where we can both work, play and rest.
The increased demand has lead to a spike in prices, in some cases, 10% or more. Property is still getting snapped up though.
What’s most interesting for me is that the people I am talking to, young hard working couples and individuals are not making any more than they were a year ago and they don’t qualify for more mortgage funding than they did a year ago.
Don’t get me wrong, with today’s rates are making mortgage payments more affordable- the problem is, the stress test hasn’t changed and neither has the amount they can qualify for.
The answer to today’s prices is in the amount of down payment being given. That has increased significantly.
So where is the extra money coming from? Simple, it’s coming from the start of a wave of generational wealth transfers or, as we used to refer to it when I worked at the bank; ‘ the bank of Mum and Dad. ‘
This is great news – because there’s hundred’s of millions, possibly billions, locked up in the equity in their houses, but there does need to be some discussion, as a family, about how that equity gets accessed and the potential costs down the road.
Making the wrong decision in terms of accessing that equity can have some consequences that might be costly. Further years of working or even having to downsize or other lifestyle sacrifices that may happen can likely be avoided with a little further planning.
Have the conversation, it might be a little awkward at first, but make sure that the whole family is taken care of.
As always, if you need to chat, I’m here to help.
JB
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