Guess How Much Your House Paid You in 2016?

This past week was full of Holiday Festivities as we gear up for Christmas and New Years.  That mixed with a ton of shovelling as we got a whole lot of snow out of nowhere.  It does look beautiful though, and we’ve done a few drives around the neighbourhood admiring the Christmas lights amidst the white streets.

Back when we worked corporate jobs, my wife and I would always take this time to jetset somewhere warm.  It was a precious 2 weeks of company shut down for us both which meant that we had to make the most of our days off.

Here we are 2 years ago, baby-less and enjoying trekking through South East Asia – this photo was taken in one of our favourite stops – Siem Reap Cambodia where we went to see the magnificent Angkor ruins.

I am not complaining though, 2016 brought us the best gift ever – and I am happy to stay home and enjoy our first Christmas right here.  Best of all – I am no longer tied to 9-5 and 2 weeks of company shut down!

When we were childless – we used these vacations to really reflect on the previous year and most of all plan for the following year.  We are still doing that, in between diaper changes, feedings and often sleepless nights.  It makes us appreciate our time even more.

Tax season is also just around the corner which works perfectly as we are able to evaluate our numbers closely and set targets for the new year.

Last week I pulled up the TREB (Toronto Real Estate Board) stats for the last one year and since I am a huge numbers guy I printed out the charts for much of the GTA – fascinating stuff!

I couldn’t believe my eyes (I mean I could but…..seriously) to see it on paper was insane.  The growth has been 20-25% in most areas in and around the GTA.

Just to point out some of the key areas (these are one year numbers in % changes).  Similar trends have been seen in York region and other areas outside the GTA (like Hamilton)

Municipality % change in one year
Oshawa 28.72
Milton 22.69
Oakville 21.22
Brampton 22.49
Mississauga 21.53

 

There was a financial post article I read just last week and I quote:

“The average home price in all of Ontario rose almost $90,000 in the past 12 months alone, meaning that, for most in the province, their house likely made more than they did last year.” Doug Porter, Chief Economist, Bank of Montreal.

And a new report suggests that these rising home values have pushed Canadians to a record level of net worth relative to their disposable income.  DBRS (a rating agency) reported that the average Canadian household had a net worth of $726,000 of which $236,000 is home equity.

Many in the industry will attribute these insane increases to the lack of supply in Ontario (and especially the GTA) which continues to experience large population growth due to immigration.

For those of us who are real estate investors – this is a double edged sword.  Yes the market has appreciated at an insane rate – 20-25% growth on our portfolio makes us sing and dance and feel all sorts of excitement.

But on the other hand, it has been a challenging year.  Property prices continue to rise in the markets we primarily invest in (Hamilton, Oshawa, Barrie, St Catharines) which means two things.  There is a ton of demand which results in tons of competition and crazy bidding wars.

There were record setting bidding wars, with homes in markets like Hamilton selling for $100,000 over asking.  Although this is exciting, it makes it hard for our investors to acquire positively cash flowing properties.  See my video on how to win in a multiple offer situation.

And so comes our need to get creative.  This year myself and many of my clients have been heavily focused on duplexing our properties.  Not only does this help with the increased demand of safe and legal rental dwellings, but it also ensures that our numbers continue to work (2 rents from a single home mean that we can comfortably afford the rising prices).

So that’s a wrap – 2016 has been a challenging but prosperous year.  I look forward to what 2017 has in store.

So until next time, happy Canadian Real Estate Investing.

Jose Jafferji, REIA

Your Real Estate Investment Advisor

 

 

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