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NEWS UPDATE - Interest Rate, Inflation & Toronto Real Estate Market

At the beginning of the year, I made 3 bold predictions.


#1 Inflation Rate will Come Down to Around 4%


#2 Interest Rate will Peak by April


#3 Real Estate Prices will Stay Flat


With the 2 big announcements over the past week or so, let’s see how my predictions are playing out.


At the end of the episode, I am going to share a Toronto Star article on the sluggish pre-construction market.


So make sure you stay till the very end.



#1 Interest Rate


On April 12, the Bank of Canada announced another rate hold at 4.5%.


As you can see from the chart, interest rate has been held steady at 4.5% for 3 months already since January.


Of course, 4.5% is still very high compared to the lowest 0.25% at the start of 2022.


But it’s the trend that we are observing here, it does look like the interest rate has peaked.


And it is further supported by the March inflation rate, which was released after the rate hold decision.


#2 Inflation Rate


The February inflation rate was at 5.2%, the lowest level we have seen since the 8.1% in June 2022.


What is the inflation rate for March?


Take a guess.


4.3%.


This is a collective effect from a number of things.


Demand was discouraged by the rate hikes.


Global supply chain issues have been easing since the world reopened.

Gas prices fell by 13.8%.


Food prices are still increasing by 9.7% year over year, but at least the increase is slowing down.


Both gas and grocery prices carry an important weight in the inflation calculation, so they are helping to cool the overall inflation.


Keep in mind that inflation is measured year over year.


From 2021 to 2022, prices had already gone up some 8% on a weighted average.


From year 22 to 23, another 8%?


That’s naturally very unlikely.


So 4.3% inflation is where we stand at the moment.


The Bank of Canada is actually projecting inflation to further come down to around 3% by the middle of the year.


The talk now is not on rate hike anymore, but rather, when would we start seeing rate cuts?


Economists are generally expecting the end of this year or early next year.


I will, of course, continue to give you updates on trends and movements.


#3 Real Estate Prices


Real estate prices have been more or less flat since the beginning of the year.


We know that interest rate plays a key role in the real estate market.


The high interest rate was a major factor in the market crash.


Now that the interest rate has stabilized, how is it going to affect the housing market?


By the way, if you have been enjoying this episode so far, make sure you subscribe and hit the bell now so you always stay on top of the market.


We are definitely seeing a lot more movements in the resale market.


If you are subscribed to my “Deal of the Week” email, you’ve seen the corner 1 bedroom unit on King St, it was sold in just 3 days.


The studio unit at the waterfront with a good tenant paying $2,100 rent…


An investor just bought it and took over the lease.


If you want to subscribe to “Deal of the Week”, you can do so at the link below.

https://www.condowong.ca/deals


The townhouse market is coming especially strong.


We listed a 13 year old townhouse at the boundary between Vaughan and Richmond Hill, just north of Highway 7.


We had 20 showings in 3 days, multiple offers and it was sold right away.

You can really see the demand.


Now, let’s talk about the sluggish pre-construction market.


Toronto Star published an article a few days ago.


“A new car, free cash: Developers look to lure nervous GTA home buyers.”


Indeed, developers are offering different kinds of incentives to kick start the pre-construction market again.


If you are a developer watching this video, let me share the winning recipe to sell your project really fast, even in the current environment.


#1 Location

#2 Price

#3 Deposit Structure

#4 Developer Reputation


Daniels On Parliament is a perfect example.


It is in downtown Toronto, literally steps to 2 streetcar lines.


One on Dundas, 8 minutes to Ryerson University and Eaton Centre.


One on College, 10 minutes to the University of Toronto.


It is $1,350 per square foot, the lowest you can find in downtown.


You only need a 10% deposit, 5% in 30 days and 5% in 200 days.

The developer is Daniels, the winner of Tarion’s lifetime achievement award.


And here’s a big bonus.


Daniels is also offering $0 closing cost. Yes, $0.


You see, that’s an irresistible offer.


Check it out at the link below.

https://www.condowong.ca/danielsonparliament


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