History shows that an increase in interest rates has little effect on the long-term value of a new home.
Over the decades, we have seen enormous fluctuations in the economy and in what people want in their homes, but historically, real estate remains an excellent investment.
This is especially pertinent today, with some people panicking over the prediction that interest rates will go up this year. It’s important to keep this in perspective.
Our Canadian economy is healthy right now, and even if interest rates rise, they won’t go into double digits. When I first came to Canada from Scotland in 1967, I worked for the new home builder Costain, constructing 2,000 sq.-ft. homes that backed onto a golf course.
They sold for $20,000, and interest rates at the time were 6%. People thought that was outrageous and that there wouldn’t be a market at all with rates that high. Trust me — the people who bought those homes are thrilled today. What an investment those turned out to be.
Sky-rocketing rates
And look what has happened since then. Remember the late 1980s and early 1990s, when rates skyrocketed up to 22% and experts said we would never see single-digit rates again?
Our current rates are phenomenal, and the fact that they may rise a bit is not the end of the world. Moving mortgage rates up half a point isn’t in the same league as a volcano spewing out ash that shut down airlines for days.
A slight rise in interest rates is not a catastrophe where new homes are concerned. Now is a terrific time to buy a new home. There is tremendous choice out there and a lot of competition, which is always good for buyers.
And another thing that never changes is the desirability of the Greater Toronto Area as a place to live. Our area will continue to grow for decades to come, especially with the incredible immigration statistics.
How can I help?
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b r i a n m a y e r real estate sales representative
Royal LePage Your Community Realty Brokerage
independently owned and operated
187 King St. East Toronto, ON. M5A 1J5
(416)-637-8000
Helping You is What We Do.
A referral remains the highest compliment I can receive.
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