Decoding the Impact of Market Forces on Home Buying Decisions

In this episode, join us for an insightful conversation with real estate expert Lambros Demos as we discuss the rapidly changing landscape of the real estate market and its impact on home buying decisions. We explore the effects of skyrocketing demand, bidding wars, and recent interest rate increases on the market, as well as the potential implications on mortgage rates and the construction industry. Learn invaluable insights on working with first-time home buyers, managing clients' expectations, and staying top of mind in this competitive market. Don't miss this opportunity to become a more informed home buyer or real estate professional in today's fast-paced and ever-changing market.

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Transcript

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0:00:04 - Speaker 1
Awesome. How is it, Lambros? It's going well. How are you doing? I'm good. I don't see any fires behind you. 

0:00:11 - Speaker 2
No, no. Thankfully I'm out of the fire zone, but they did say there's smoke in the air, so I don't know. I haven't seen it, i haven't been able to smell it or breathe it, so I don't know what's going on. 

0:00:23 - Speaker 1
Yeah, i haven't read too much on it. I've seen pictures from the east coast Okay, and they're getting some yellow skies and some fogginess from the fire. 

0:00:33 - Speaker 2
Yeah, i've seen the same pictures as well, but the real estate market is on fire, that's for sure. Yes, yes it is. 

0:00:42 - Speaker 1
That's a very good pivot. Yeah, so what's been going on up in your area with real estate? I know we'll get into it with the show, but Sure, no problem. 

0:00:54 - Speaker 2
Yeah, absolutely. I didn't mean to jump the gun here to ask other questions or anything, but yeah, i mean things have picked up a lot since about early March or so. Just, we've had a ton more supply come to the market and even more demand right. So the demand right now is outpacing supply. So month over month it's almost getting back to normal levels. That we saw last year took a dip And during the pandemic was crazy. So I kind of don't include those two years or two years or whatever they are. 

So I'm looking at pre-pandemic numbers and we're close to the averages of pre-pandemic numbers, so we're getting back to a normal market right now. 

0:01:42 - Speaker 3
Yeah. 

0:01:43 - Speaker 2
But we are seeing, with the low supply, we are seeing bidding wars again And we're getting an average of about three to four offers per sale right. So anytime somebody goes to put in an offer, there's going to be at least two other people bidding at the same time. 

0:01:59 - Speaker 1
Yeah, on average, yeah, and that's good to hear. The interest rate didn't stunt the demand side of things, which is good to see. 

0:02:08 - Speaker 2
Well, yeah, that might be too early to tell right, Because we had like I don't know how it works where you are, but here. We just had an interest rate announcement Yesterday. So after a couple months of keeping the status quo, our brilliant government decided to increase rates again yesterday, another quarter point. So it's going to be interesting to see how that affects the market. Yeah, There may be more coming. The next announcement is in July. So if it bumps up again, I think the market's going to take a hit a little bit, Because it tends to slow down over the summer anyway. So it'll be interesting to see what happens at that point. 

0:02:48 - Speaker 1
Yeah, where are you guys at right now with interest rate? Can you recall what they announced? 

0:02:52 - Speaker 2
Yeah, the overnight rate is 4.75. So that's the rate that the banks get charged. Then there's a 2.2% on top of that. So our prime rate is 6.95, right, and then it goes from there. So you can get a mortgage at prime plus or prime minus or whatever the case may be. Most line of credits are at prime plus a half. So you're looking at about an average of about 7 to 7.5 for more than just lines of credits, that kind of thing. 

0:03:26 - Speaker 1
Awesome, yeah, and we're going to dive into that with the show, because there's not a lot of people that understand. When they make the announcement and they make their rate, that isn't the rate you're getting. 

0:03:37 - Speaker 2
That's the rate the bank is getting, and then there's on top of it. 

0:03:41 - Speaker 1
So that's a super cool dynamic If we can jump into that. 

0:03:44 - Speaker 2
Sure Yeah absolutely. 

0:03:45 - Speaker 1
That'd be awesome. 

0:03:47 - Speaker 3
I don't think we have to like stop, just keep it going and just say, hey, yeah, we're back and yeah, oh yeah we'll skip the intro. Yeah, we're just Okay. 

0:03:55 - Speaker 1
Yeah, whatever you guys want. I mean because everybody knows Lambrose. This is your fourth time on the show, i believe. 

0:04:01 - Speaker 2
I've lost count, i don't know, yeah, so everybody knows Lambrose, we're jumping right into it. 

0:04:05 - Speaker 3
All right, cool, episode 14. Okay. 

0:04:08 - Speaker 1
So 14. Yes, i've done four of them. 

0:04:12 - Speaker 2
What is that You said? episode 14 and I've done season three season, three season three Oh gotcha Okay, okay. 

0:04:19 - Speaker 1
Yeah, Yeah. So the interest rate part. I just want to go right off of that because we're on it. And when the federal government comes out and gives those rates and they make the announcements. The one thing that I've had to talk to buyers about is the. That's just one piece of the pie, like you said. There's prime on top of that And then there's I don't know if you want to call them fees or there are. 

0:04:46 - Speaker 2
There are I don't know if they're fees, but they're just what the bank charges, right, so you can get a mortgage at prime plus or you can get, if you got really good credit and really good down payment you may even get a prime minus. You know, whatever it is, they might give you a discount. So there are discounts on certain lenders. Usually the major banks will give you a discount on certain things, the smaller lenders. If you don't qualify for a prime lender, like an A lender, you may have to look at other options like a, b lender, c lender, private lender, and those tend to be more expensive. So they'll tack on more on top of the of the prime. 

0:05:23 - Speaker 1
Yeah, Yeah, and then I just had a random thought and I don't know if you'd be able to answer it, but through the buying process they always talk about buying points. So when you originate your loan, you can purchase points, which is you giving them money up front and they lower your interest rate. Do you know what section of that loan you are are paying the points to? Is it the prime? Is it? 

0:05:50 - Speaker 2
Yeah, that's over my head. I'm not really a mortgage guy so I don't really know that part of the game. 

0:05:57 - Speaker 3
Yeah, so either. 

0:06:00 - Speaker 2
Yeah, you'd have to talk to a mortgage person about that. 

0:06:03 - Speaker 1
Yeah, Yeah, those are the ins and outs of the legalities of it that I'm curious on. but sure, sure I'll talk to the right person. 

0:06:13 - Speaker 2
Yeah, yeah, absolutely. 

0:06:16 - Speaker 1
So you guys are you're underneath this new right now, or where does that take effect with the announcement that just happened yesterday, where they said it was five and a half? 

0:06:25 - Speaker 2
No 4.75 is 4.75. That's okay. The key rate, or the overnight rate they call it, you know. So that's the rate that the banks pay. 

Okay, it was, it was four and a half And actually going backwards, it was before all these interest rate. We had eight interest rate hikes. Last year, 2022. It was at like 0.25. Like like almost nothing, like zero, yeah right. So. So then they started increasing, increasing, increasing And now it's jumped up to 4.75 in just over a year. Yeah, so you can imagine the shock that that homeowners are going to have when they go to renew their mortgages. They took a mortgage out at, say, one and a half percent or under 2%. Now they're going to go and renew and it's going to be at seven or something percent. 

0:07:20 - Speaker 1
Yes, yeah, and the the magnitude of that isn't felt until you amortize your loan and you see the total amount. Correct? I was just looking at something yesterday that So if you bought a house during that COVID period where money was free, yeah, and you had a $10,000 loan, 3% and it extrapolated what your total payment would be in today's market If you bought a house for $10,000 less, and I'm saying I think it was close to three times or two times the amount of the total loan for a lesser value house, just because the interest rate is so much higher than what it was before. 

0:08:02 - Speaker 2
Yeah, something like that And that is like a mind blowing. you get to see the end game and how much you're paying, and all this stuff 100% and most of it now, or more of it at least, is going towards the interest portion, because yeah, you're right. 

We have to factor in home prices And home prices where at their peak in March of 2022 or April. That's when the decline started, but at the same time. So home prices were coming down but interest rates were going up, so the amount that people were paying per month is probably gonna stay the same or maybe even go up because of the interest rate. Yeah, it doesn't cover how much the home prices have come down. 

0:08:42 - Speaker 1
Yeah, and have you noticed in your area? Because again you are in the condo market in the Toronto area correct, i don't only do condos. 

0:08:54 - Speaker 2
I'm just outside of Toronto, actually a place called Mississauga, so we're just west of Toronto And I do, you know, short I mean low rise homes, attached houses, single family homes, that kind of thing as well. That is condo. 

0:09:11 - Speaker 1
Yeah, and I didn't mean to pigeonhole you in condos, i just know, in. I think the second or third time you were on you talked about the makeup of Toronto and it being a lot of condos, so I guess more or less forced into that market In downtown. 

0:09:24 - Speaker 2
the downtown part of Toronto is pretty much all concrete jungle, So it's all the condos and stuff. It's a good way to put it. 

0:09:31 - Speaker 1
Good way to put it. 

0:09:32 - Speaker 2
Gotta love the big cities, absolutely Yes. Not for me, but for someone else, I'm sure. 

0:09:37 - Speaker 1
Yes, definitely. I got out of the city as soon as I had a kid. 

0:09:40 - Speaker 2
I needed a driveway Nice, nice Yeah. 

0:09:43 - Speaker 1
I like the driveways. 

0:09:44 - Speaker 2
I like the space, i like backyards, i like that kind of. 

0:09:46 - Speaker 1
Oh yeah, absolutely So. with the interest rates going up, the prices going down, have you noticed like a change in where your clients are going? Are they being steered away from one type of hotbed that used to be the bread and butter of what you saw and what people were going after? Is there any sort of shift in what you're seeing with your clients because of the changing in home prices and interest rates going up? 

0:10:17 - Speaker 2
Yeah absolutely I mean, i'm working with a couple right now and we started off looking at homes in the $1.1 million range but as the months went by, again home prices were increasing at about 4% a month since March of this year. So we lost out on a couple of bidding wars and now all of a sudden that 1.1 is not buying them the house that they were hoping to get. So now she actually just emailed me this morning and is looking at condos. So she said what kind of condo can we get? So now we're looking at a 700K budget for a condo as opposed to the 1.1 for a single family home. So it's changing their search, certainly right, so that is affecting people this way. 

Yeah, yeah. 

0:11:07 - Speaker 1
Do you feel like that's a good direction for them to go in, or is that more forced of the times? It's a force of the times for sure. 

0:11:16 - Speaker 2
I mean for them. I can't speak to what's best for them or not. They are a young couple. They just got married, they're living to her parents' home, so they do need to be on their own, whether it's their own place or whether it's a condo. They were hoping for their own place Because their family is very close. I guess they wanted to have some family with them. But now I guess their thought process has changed and thinking you know what, maybe we can just be by ourselves in a condo, kind of thing. So I guess it's changing the way they perceive themselves living in the near future. 

0:11:53 - Speaker 1
Yeah, Yeah, and there's upsides to con. They're not going to have yard work, yeah that's good. 

0:11:59 - Speaker 2
Yeah, that's a good thing. 

0:12:01 - Speaker 1
They can start their family and avoid the yard work. 

0:12:03 - Speaker 2
Yeah, there are some pluses, certainly, but some people do enjoy the yard work, so you know. Yeah. 

0:12:11 - Speaker 1
Yeah, has the development been going down or picking up in in, like the metro area? 

0:12:17 - Speaker 2
Yeah, yeah, certainly. I mean I'm not too up to speed on on new construction and things like that. It's not my, i don't do much of that, but I have heard that construction has slowed down certainly. 

0:12:31 - Speaker 1
Yeah. 

0:12:32 - Speaker 2
And even some projects that were supposed to be completed are not being completed on time. They're being delayed. A lot of people are trying to get out of their commitments before they close. We call that an assignment sale, i don't know what you guys call it there. So I mean for sure that that has slowed down tremendously. So it's not only home prices that have come down, but there's a double whammy because construction costs have gone up, right, the cost of materials has gone up, you know, with the supply chain shortages and all this you know, and so the builders are hit from both sides on that. 

0:13:08 - Speaker 1
Yeah, and it's starting to level out from the building side. But there was a period where I felt like every week there was a new price for a two by four or a sheet of plywood. Yeah, it would vary between like $10 by week And it was super weird that it fluctuated so well, it's kind of getting stable. It's still higher than. 

0:13:30 - Speaker 2
Yeah, What we're used to, but Yeah, Yeah. So you know, I think that's the thing that's been going on. I mean, I think that's the thing that's been going on for a couple of, you know, contractor guys that I know and they were saying they used to be able to buy, you know, two by fours at three bucks for whatever they were getting. 

0:13:47 - Speaker 3
Now they're paying nine bucks, so three times as much as they were paying before. Yeah, quality went down. Yeah, maybe they're way more like contorted and all wavy. 

0:13:56 - Speaker 2
Like you have to take way much more. But you know, you know you can't really get the right amount of wood on the wood to. You know, filter out the good from the bad ones, Right, yeah, yeah, that's insane And I will say that the loss of Canadian lumber Hurt. Because I would see every two by four stamped with Canada. 

0:14:17 - Speaker 1
Oh, was that right? Okay, yeah, through Through the COVID period, it was changing Cause I think they were just trying to find anything And I don't know what to do, and I don't know what to do. 

0:14:29 - Speaker 2
I don't know what to do. I don't know what to do. I don't know where I can get them from. Certainly, and I guess now with these forest fires. 

0:14:37 - Speaker 3
Maybe that's going to get even worse, because maybe there's going to be even less lumber to To go around. I hope. I don't want to get conspiracy theories, but maybe they're doing that to To pad the profit margins again. 

You know what That just cost my mind as well, creating a demand for it When it's a false No, i saw the same thing when I was buying Just some pine to put this tabletop together. Yeah, i don't know why it stuck in my mind. I'm looking at like Sweden but I'm like, okay, well, maybe they're the same supplier as IKEA, but IKEA stuff is mostly like Yeah, yeah, yeah, interesting, yeah, maybe they are importing from Sweden, Oh yeah, it could be On the on the forest fires, because I haven't read anything on it, mm-hmm. 

0:15:18 - Speaker 1
Do they have like a theory of how it all started? or Because I don't know where it's located? I've never seen a picture or anything. I've just heard it's been going on. 

0:15:26 - Speaker 2
Yeah, i haven't, you know, dived into it too much either. Our Premiere, like we have, you know, you have governors of states, we have premiers of the province, right. So our premier, okay, suggested that it was Negligent campers. You know setting fires and things like that and all the dry wood and brush and all this stuff, right? 

So combination of those two things, but who knows, who knows? I mean, dan may have touched on something there, because there have been, if farms, you know, being set on fire as well, like all the crops being burned and things like that in the US, right, yeah, i've heard about that, so are they was turning into a conspiracy theory. 

Yeah, no, i'm far from a conspiracy theorist, but you got to wonder, like, what's going on here? like why are all these crops being burned At the same time, where you know the price of food has gone through the roof, you know? So what is it going up intentionally, like I don't know? It's just it's weird. 

0:16:30 - Speaker 3
I think every industry is seeing that they can increase price and like, like increased price solely for profit and that's it, like there's there's no justification other than saying that there's a Supply issue or demand is going up. I had a guy randomly stopped me the other day at the grocery store. He's like I just came from Florida and he's like everything is like two or three times more expensive up here in Wisconsin than it is down in Florida and It I don't. We have no reason why or can't figure out why. But you know, if All these in the industry shifting right, trying to take advantage of eggs for a while, toilet paper for a while, gas like, but there's no, there's no, i guess, true or legitimate reason why that the prices have increased other than a let's just raise prices so that we can increase our profits and yeah, that's the way I feel as well, like just stop increasing prices And then when there's smoke, there's fire that'll bring down 

0:17:28 - Speaker 1
inflation Yeah literally. 

0:17:30 - Speaker 2
So Maybe that'll bring down inflation. If you, you know, go after these companies and tell them stop me, stop increasing prices, stop burning your crops and things. That, yeah, just just the thought. 

0:17:42 - Speaker 1
Yeah no, it's. I mean, it's kind of cool and I've always talked about. For me it was Walmart. There was always, like back in the day, there was this anti Walmart push, yeah, and I couldn't understand why people would would bash a company and then go there and buy stuff from them. I'm like you're doing the opposite of what you want to do. So it in a little, in a little regard, i'm I'm happy to see the boycotts that are going on about things that we don't like, yeah, but Also, like I, i hope they're directing, they continue to be directed in the right way and they can stop when they need to stop, because that is again, there's always a too much, yeah everything is good in moderation. 

0:18:27 - Speaker 3
But, once you get far. 

0:18:28 - Speaker 1
Then we're like okay, we got to slow down here. 

0:18:31 - Speaker 2
But at the same time, maybe these people that are protesting also are hurting, you know. So if they can't afford to go anywhere else and Walmart is their, Exactly, yeah, you know, they end up being hypocrites right, so yeah yeah, it is tough. 

0:18:45 - Speaker 1
Yeah, so we'll see how that all shakes out. But in in on the building side, it's super hard. You can't go to another vendor because the other vendor is gonna charge you about the same price as well. So even if you don't like the brand, like you're stuck because it's a resource, i guess. 

0:19:01 - Speaker 2
Yeah. 

0:19:01 - Speaker 1
Yeah, that's right, so we'll. We'll see, i guess, where that shakes out. But the forest isn't or the forest fire is not in any type of residential area, so it's not affecting the landscape of the real estate in the area, correct? No? 

0:19:18 - Speaker 2
no, no, it's far from us. Yeah, okay, Cool Yeah that's good. 

0:19:23 - Speaker 1
Yeah, I was gonna say it's gonna be great driving the showings with the Background. I'll be like this house may or may not be there on closing day. 

0:19:33 - Speaker 2
We'll see exactly. Yeah, you better get a short closing if you want to. Oh yeah, quick closing, quick closing. But when I get my paycheck? 

0:19:43 - Speaker 1
Yeah, have you been noticing anything with? obviously the prices of homes are are going up. Have you seen? I know there's gonna be a correlation with the average home sale. Just with prices going up, your home sales gonna go up. Do you see the buyer pool moving into more of a BC class and the A's are left vacant? Cause I'm making the analogy in the rental world. When we're in a climate like this, on the rental side of things, everybody drops a class. So if you're renting an A apartment, a luxury apartment, you go to a B, b's would go to C, c's would go to D. Helps save money, which really, in inflation times, you're not saving money, you're just paying the same for less quality. Yeah, yeah. 

0:20:31 - Speaker 3
Are you seeing that? 

0:20:31 - Speaker 1
in your area where they're buying less luxury and just trying to get into something. 

0:20:37 - Speaker 2
Yeah, no, that's a good point. I hadn't thought of it that way, but it is happening. I had a gentleman who, i mean, his budget did not match the what he was looking for, you know. So there's a great meme circulating right now with Joe Pesci if you want to search for it, it's hilarious. It says when your clients you know, budget doesn't match the actual house I'm not sure what movie it's from, maybe Goodfellas or something And he's like, what the fuck is this? 

You know how Joe Pesci talks, right, sorry for the language, yeah, but you know I'm just quoting him. So it's hilarious, but that's pretty much what's happening, right? Yeah, so I'm showing him around. He tells me his budget. He wants to keep it under 500,000. So I'm showing him this is what you're gonna get under 500,000. He's like walking in there, like oh no, i have no interest whatsoever. And then I show him something that's over 500,000. It's much nicer. He says, okay, i really like this. And I said, okay, i don't wanna mention his name, but we'll just call him Joe. 

Hey, joe, you know this is gonna sell. They're holding back offers here. I'm gonna get multiples. It's probably gonna sell around 510. You okay with that? And he goes yeah, what if we offer 480? Well, actually no. He said 465 at first, forced. I'm like, come on, it's not even gonna work, they're not even gonna look at your offer. So I got him up to 480. It went nowhere, obviously. It did end up selling for 510 for exact amount that I had predicted. So that was one lesson. but eventually he, kind of you know, understood what his budget is gonna get him And he ended up settling for something much smaller, not I mean class-wise. It was okay, it was a nice place and a nice location, but it was much smaller than what he had hoped for, right? so he had to compromise on the size. 

0:22:42 - Speaker 1
Yeah, the sticker shock is real, for is Joe a new home buyer or first time home buyer? 

0:22:51 - Speaker 2
Well, no, yes and no. I mean, he did own a home with his wife, but they're split now. So it's the first time he's buying on his own. 

0:22:59 - Speaker 1
Okay, yeah, for I've seen new home buyers get kind of the sticker shock of this is what I want. We call it the Pinterest effect. Like you look at all the Pinterest photos and you want that, and then you want the home, and then you see the price and you're like, well, I can't do that. 

0:23:20 - Speaker 2
And then you see what you actually get. The previous couple I mentioned are first time home buyers, so they're getting that Pinterest shock. 

0:23:28 - Speaker 1
Yeah, and I just I want to. even if you ask them all the questions of what they want and what their needs are like, from one to 10, what is your? I can't do this without it. So a backyard. if you need a backyard, that's your number one thing. And once they go through a couple houses, then it all kind of changes because they see how much a first floor laundry would get them or what 3000 square feet would cost, like those type of things that you can articulate until you're standing in the house. 100% Yeah. 

0:24:03 - Speaker 2
And it's a decision maker is that that gets even worse because prices are going up every day? Yes, you know, and that's something that they learn sometimes the hard way. 

0:24:14 - Speaker 1
Yeah, and I know you mentioned to me the one that I've seen a few times around here. it's kind of like a HGTV episode where they take a snippet off. I don't know who the buyers are or the agent, but the caption's like I'm a preschool teacher and my husband makes pottery. Our budget is 1.5 million. 

0:24:35 - Speaker 2
Yeah, yeah, yeah, that's right. 

0:24:37 - Speaker 1
That's right. I don't think that's gonna work. 

0:24:39 - Speaker 2
Yeah, there's a lot of variations of those ones, right? So? 

0:24:42 - Speaker 1
yeah, I've seen that. 

0:24:43 - Speaker 2
Yeah, yeah. 

0:24:44 - Speaker 1
Man. So we see the going back to the interest rate here. We're gonna try to go into the future predictions of the Toronto market, with it ever changing week by week. So your interest rate just got announced. The next one's gonna be out in July. You said, yeah, you kind of predicted it's gonna stunt it a little bit, correct I? 

0:25:10 - Speaker 2
think so. I think so because this it's gonna bring down buying power, right? So people are gonna be qualifying for less, And the last time they started this ball rolling with the interest rates, it did affect the market. So, especially now, if they do two consecutive ones the one now and one in July I think it's really gonna be a slow summer with respect to buying real estate And you might see prices come down a little bit. 

0:25:38 - Speaker 1
Yeah Yeah, you were an agent during the last recession, correct? Like they had nine, 10, or eight, nine, 10. No, no. 

0:25:48 - Speaker 2
I hadn't had my license at that point. Okay, i got it shortly thereafter. 

0:25:53 - Speaker 1
Okay, yeah, because I was not involved in real estate at that point either. So, even though this has happened before, i can go on data, but I can't go from experience. So I'm super curious to see, like you're saying, back to back, interest rate hikes we're in this period right now where everything is inflated. They're talking about the doomsday scenario of a depression coming on What will happen and how is that gonna affect clients and how it's gonna affect investors, because this is my first time through it, yeah, so I'm very curious to see what happens with that one as well. 

0:26:31 - Speaker 2
Yeah, i mean, who knows? I mean, who knows? All I can say is that here in Canada, i think we're a little more prudent in terms of lending than the US is. So you mentioned the O8 crash. The US got hit a lot harder than we did, yeah, i mean. Yeah, we had a bit of a recession at that point home prices went down, but we rebounded quickly And since then they have brought in some measures to help home buyers. 

Like we brought in something called a stress test. So basically you have to qualify at two percentage points higher than what your mortgage rate is gonna be. So anybody taken out say in today's, let's say, they get a 7% interest rate, they have to qualify at 9%. So even if it does increase more, at least they know they have that cushion so that they can still pay their mortgages. But I'm worried about the people who qualify at like 5.25 or something like that, which was the stress test rate. So it was either 2% higher than what you would qualify for or the 5.25, whichever is higher. So the ones that did qualify at 5.25, now we're already almost two points over that. 

In some cases we are over that. So who knows if those people will be able to pay their mortgages on renewal. And again, i don't know how it works down there, but here most people take out a five year term, so they have. Maybe they might have a 25 or 30 year amortization, but it goes in chunks, right. So there's a five year term. At the end of that five years you have to renew, right. 

0:28:22 - Speaker 3
Sometimes it's less than five years. Okay, you're talking about an arm right, a five one. Yeah, exactly, yeah, something like that, yeah. 

0:28:29 - Speaker 2
I mean whatever you guys call it, not sure, but I'm thinking about the people in 2020, 2021, and maybe early 2022, when the interest rates were dirt cheap. So they may have taken out a mortgage at, say, three, three and a quarter and then stress test at 5.25. And if they only got a short term, what's going to happen in 2025, 2026, 2027, if these interest rates are still high there? 

0:29:01 - Speaker 3
So we made that mistake. Yeah, we thought we were getting a 30 year fixed, signed the paperwork, we tried verifying it with the mortgage company. We got to closing. I would I don't want to say incorrectly assumed that it was a 30 year term and it ends up being a 5 1. So, after five years, because we bought our house in October of 2020, yeah, in five years it can increase, but only 1%, oh I see Oh it will only be 1% every year on that anniversary date. 

So we kind of lucked out. But We, i think, because we didn't put the full 20% down on the property, because we use the funds for a little bit of light renovation Yeah well, i like that, i like that better because now you know at least, if it goes up It's only gonna go by 1%. 

0:29:56 - Speaker 2
Yeah, so what the? what the actual interest rates are, so that that method is actually better, because I think some of these people in next year or the following year are gonna have some some tough decisions to make. Yeah, you know sell your house, or you know sell the kids or something, i don't know was, and that's another thing that people like all the kids. 

0:30:19 - Speaker 3
There's a lot of people also that We're buying cars. So they were buying cars at an overinflated like sticker price, right, because cars were hard to come by. So they're paying, they're over leveraged on the vehicles and if those start to slip or they can't make those payments, it's gonna trickle into the housing market not maybe a substantially, but you will see Those trickling in and people having to sell one or the other or both because the payments are gonna put them out of Be able to survive 100%. 

0:30:50 - Speaker 2
One of the one of my mortgage brokers. He's got something called the, the used Porsche tracker. So since September he's been tracking how many people are selling their Porsches, right So, because All the toys are gonna go according to him, right? So people can't, they need to, they're not gonna. The house is the last thing they're gonna lose, right? So they have to sell everything else off. And it's gone up since September. It's gone up So it's it was about 9,000 or something. Now It's at 11,000 people are or, sorry, not 9,900. Now It's 1100 people selling their Porsches in this area. 

0:31:25 - Speaker 1
Yeah, wow. So not even in in rental markets. They move down in class. In the automotive market, they move down in class. 

0:31:33 - Speaker 2
There you go Exactly. You see a lot more geo metros going around the ring. 

0:31:36 - Speaker 1
Yeah, what's the? 

0:31:37 - Speaker 3
last time geos produced a car man, come on you could have said I know. I'm so. I'm saying it was a more recent loss. I think that was 2008, 2009. They produced their last ones. Yeah, didn't GM by them. They had them under their umbrella for a long time same with old mobile and geo. Yeah, geo prisms and Chevy prisms were the same car. Toyota Corolla shared the same engine. All that good stuff. 

0:32:05 - Speaker 2
So well, what's that Ford model? that the, the cheap one, the? 

0:32:10 - Speaker 3
fiesta Focus. It was one day. 

0:32:13 - Speaker 2
Yeah, oh, the focus. No, there was another one. It was that they, they stopped making, or something I can't remember the dart They brought the dart back. 

0:32:24 - Speaker 3
They brought it. I mean, that was what? 

0:32:27 - Speaker 1
five, ten years ago They brought the dart back. 

0:32:29 - Speaker 3
Yeah that. And then they, they brought, they introduced the Chrysler 200, which is basically the, the sister you know Of the family like the cousin of it, because it's Chrysler and Dodge were same umbrella as well, all owned by Daimler Chrysler and Over in Europe. I think it's Germany or whatever. 

0:32:46 - Speaker 1
I wish I knew more about cars. I don't know the whole background of those things. 

0:32:49 - Speaker 3
I've had way too many cars, I'm willing to admit I every couple of years I would get a new car and I finally got out of my bad habit with that and started getting smarter with Not having a car loan and all that good stuff. But you got your last one was a good purchase. 

0:33:06 - Speaker 1
That thing is a boat though. Yeah, he went down in his automotive class and he bought. He bought like a, a small tugboat. 

0:33:15 - Speaker 3
It's a 99 mercury grand marquee. Oh wow, yeah, they had a little mileage 35,000 miles that I just bought it two years ago. So wow, absolutely nice. I'm trying to remember what that Ford one is. It might have been called something different in Canada, though That could be where the confusion comes, i don't know. I mean, there's the Fiesta, the Ford fusion. Was it long, like older, like late 90s or 80s or 2000s? 

0:33:41 - Speaker 2
I have no idea. 

0:33:42 - Speaker 3
Rambler. 

0:33:45 - Speaker 2
Yeah, no. When I was 16, i started learning to drive on my my parents, to Chevy and Paula. 

0:33:53 - Speaker 3
So I know all the big boats right. 

0:33:55 - Speaker 2
Yeah, yeah, yeah Yeah. I think it made me a better driver, because now, if I can steer that thing, i can steer anything, yep. 

0:34:02 - Speaker 1
Yeah, you can dodge a wrench, you can dodge a ball. There you go. I mean, i do have a question on that with those new, the new home buyers that had that Pinterest effect. Yeah, as an agent, what are things that that you do with those new time home buyers in your efforts to hopefully, like I don't know, readjust their focus or readjust their lenses? in terms of All right, when I'm looking at real estate, i put my real estate glasses on. You got to get rid of the Pinterest filter and just see what it is. Do you have tactics or have you learned tactics or or been taught like Little things to do and how to pull their realistic Thought process back in? 

0:34:45 - Speaker 2
Yeah, no, that's a great point, um, with, you got to get to know the people, right? so see, uh, i mean, they might tell you one thing But they might be thinking something else and and you never know who they're influenced by, right, i know, with this couple, they, they lean a lot on their family, right? So, um, their family has a big influence on them, especially, um, uh, the girl's mom, you know. So I go directly to the source, right, uh, she, she brought her mom a couple times on the showings as well. So now I'm kind of talking to her as well, because, um, i don't want to point the finger at her, but it's because of her. Um, they, they listen to her instead of listening to me. 

When they lost out on the bidding works, i told them it's gonna sell for X. She said, no, we're gonna go in with Y and guess what? they lost it, right, uh, you know, that's a lesson. I was hoping that was, that was a lesson for them to learn, but unfortunately they did, they, they still doing the same thing because the mom, they didn't have a big influence over them. So I, i try and and I find out exactly how their thought process is and then, who they're getting their information from. 

0:36:01 - Speaker 3
Who's pulling the strings? 

0:36:02 - Speaker 2
who's pulling the strings exactly? and just talk to that person, right. Talk, go to the source, right, and say, hey, you know what? and make them see the light and say, look this, you know, i mean, i know you love your kids. I know you mean, well, your intentions are good, but, um, you know this is not gonna happen, right? Yeah, what you're saying and what you're suggesting, right? 

0:36:22 - Speaker 3
You ever go to her direct and just say, hey, i appreciate the input, you're guiding them Right or wrong, but are you gonna be helping them financially make this decision Right so you could have the best intentions for your kid, but they're the ones that have to live in it. They have to pay for it. Yeah, you're giving them unrealistic Expectations with what they can either afford or what we're able to find for them. 

0:36:43 - Speaker 2
Yeah, I think there is that element as well. I think what if they were gonna be going with the 1.1 million dollar house? I think she was gonna have, you know, some financial input there as well. So I think I think that's part of it as well. So that's why they lean on her so much, right, and now that they've shifted to the condo, maybe she won't be as involved, right, because, yeah, we'll see how it goes. 

0:37:11 - Speaker 1
Yeah, there been a couple buyers that I would sit down and The couples are a little difficult because you'll have the husband that wants X and the wife that wants Y. Yeah, and you don't know how you're gonna find a Tri-level ranch with no yard yet an acre. 

0:37:29 - Speaker 3
So like you're trying to, yeah, you're trying to Meet in the middle somewhere. 

0:37:38 - Speaker 1
Is the the family focus? yeah, some, some parents or relatives will help with the down payment. So now they're brought in. Yeah, that's right. 

I've. I've had one where my clients were. They were weren't looking for a full flick fixer upper, but they wanted to put some of their personal touch in, and their grandfather was a contractor for 30 years. So as you talk to him, as you ask him questions, more and more comes out, and I've never been the one to shy away from okay, if your grandpa is a contractor and he's me working in the house, have him come to the showing with us and I'll sit and I'll say, hey, i've been a contractor for X years, you've been a contractor for 20 years. So I'm just gonna follow you around and you tell me, yeah, they like to. 

0:38:23 - Speaker 2
They like to be. 

0:38:24 - Speaker 1
I make them feel part of the decision-making process exactly Yeah and at the end I'll let them know that, hey, at the end of the day, this is gonna be your decision. I can tell you if I think it's gonna work or not, but at the end of the day we don't know until the offer gets put in and we get an answer. So I'm trying to help you. From what I've seen, your grandpa or your mom is trying to help you with what they've seen or what they can Supply, but at the end of the day, it comes down to you and your decision. So you have to feel comfortable. Yeah, but I will be direct and I'll tell you that I do not think that'll work. If I don't think it's gonna work, if you're gonna Offer 50,000 lower because your mom said that we should offer 50,000 lower, yeah, i'll flat out tell you that this is not gonna work. 

Yeah, yeah, i'm pretty much the case unfortunately, we put in the offer and then they get upset. 

0:39:14 - Speaker 2
And hopefully they don't get upset at you. As long as you can. 

0:39:17 - Speaker 1
I know and that's the tough part where you have to say like I do not suggest you do this, i don't think it's gonna be a good idea, yeah, but it'll always come back to you, unfortunately. 

0:39:26 - Speaker 3
Yeah, yeah you're the one delivering the news. 

0:39:29 - Speaker 1
Yeah that's it. Shoot the messenger. Right, you're right, i know, i know, hopefully you can, and I also feel that, if I can get in front of That, i'm gonna call it the quote-unquote decision maker, because in that scenario the mother would be the decision maker, correct? If you can talk to them and try to ask them questions to see where they're coming from, it may help you kind of guide your actual clients as well. 

So you're not talking through a filter, because I I never like the end person gets I don't get the right message from the mom through the filter and the mom doesn't get the right filter or the message through the filter from me. Yeah, that makes sense. 

0:40:06 - Speaker 2
Yeah so if we can, bring together. 

0:40:08 - Speaker 1
I feel like 100%. 

0:40:09 - Speaker 2
I always like to talk to everybody at the same time. So I had a situation Where we've had a few times actually on the selling side, right? So there was two different sellers, whether they were Sisters or so they weren't necessarily a couple, they were just two people that don't happen to own the house. So, and it's difficult because you got to get them both on the phone at the same time Because, again, things can get lost in translation if you tell one person and the other side, especially if there's conflict between the two, right, so, yes, the one side thinks you're favoring the other side. It just becomes a big mess, right? This happens in the four situations, or estate situations where the siblings can't agree on stuff. You know stuff like that. 

0:40:53 - Speaker 1
Yeah, I had talked to an agent early on in my my real estate days and That agent did primarily divorce sales. Yeah, and I was like that has got to be a mentally exhausting. Market yeah, he's like yeah, half the time I'm an agent, half the time of a therapist There you go. There you go. 

0:41:15 - Speaker 2
You just hope that they're cordial, exactly, and if they're not, that means you got to do double the work, because whatever you tell to one spouse, you got to tell to the other spouse, and they just yeah. Yeah, got to double up on everything. 

0:41:27 - Speaker 1
Yeah, and he talked about phone calls. He'd have to call the husband or the one party and then call the other party and yeah, okay, well, that gave me news, i got to call them back. 

0:41:36 - Speaker 2
Yeah, and who do you? 

0:41:37 - Speaker 1
jump on a phone call together. 

0:41:39 - Speaker 2
No, no, exactly, exactly, oh does. Does my husband know? Yeah, i already. Why'd you call him first? Yeah, you know it's, it's no win situation. Yeah, yes, yeah. 

0:41:54 - Speaker 1
Man, but you're all just trying to get to the endgame and hopefully you can just unify him at much to that point. But yeah, yeah, oh, that's tough, that's tough. 

Yeah, so you are. We're in July. I'm trying to think of when we could get you back because I want to constantly track with with how this Interest rate situations going, because over here were, i feel like we're in a very unique kind of area because we actually just passed legislation for, like loan assistance. So, yeah, the, the, the clients with a higher interest rate are now There's tacking on points so that you can help with some of the more at risk loans. So, higher credit score, you pay more to assist with the lower credit score lenders, or. Okay, and that started back in late March, i believe, or early April. So I think that's gonna be our biggest yet to see what happens. Because I think, with you were trying to explain about the protection in the loans and how Canada has the, the two percentage test higher. Yeah, and I would. 

I'd like to look back because I might be way off on this one, but When we tried to come out of the last depression, we started opening up lending to Some riskier loans which would then foreclose, and then we had our foreclosure, yeah, upswing, and I think this is an efforts To try to mitigate that from happening again. Yeah, but there's been a lot of pushback with people about obviously, why am I paying for at risk loan when I'm not at risk? Yeah, so, and then, on top of that, with the interest rates going higher, i am super curious to see what happens through this summer months, when normally we're seeing our uptick. What's gonna happen? because, yeah, there's still mark, there's still houses on the market, it's lower, but I Don't. I don't see a mad dash or maybe I'm just skewed, because I saw a mad dash through COVID, Like I'm not taking out those two years? 

Maybe, like you are. 

0:44:13 - Speaker 2
Yeah, yeah. Well, i only take them out when I'm when I'm trying to look at stats and compare today's market to a normal market. Right, because those were far from normal. 

0:44:23 - Speaker 3
Those are anomalies. 

0:44:24 - Speaker 2
Yeah, exactly anomalies. 2022 was not normal market. Things were going down the toilet. 2021 also was not a normal market because it was going the other way. It was just increasing Craziness. It was Double-digit appreciation We saw a month over month. You know how is that sustainable? It's not yeah. 

And we saw what happened the following year and 2020 also wasn't normal Because that's when the pandemic first started. So we saw you know everything there. So we saw the market just stopped for six weeks, nothing was selling, and then all of a sudden it took off again Because they brought the interest rates way down. You know so, when interest rates are being, you know, toyed around like that, and then it's gonna affect the market in weird ways, so I was look at 2019 and earlier. Yeah, yeah. 

0:45:14 - Speaker 1
Yeah, so I'm, it's uh, it's gonna be a wild kind of um A wild time for some people. Um, i am, i'm kind of scared that we're gonna have another, another market where we're gonna have a lot of foreclosures, because I feel like there's a lot of in. Dan, you can, um, correct me or put your input in, but I feel like there's a lot of push for people to To buy right now Rather than rent, and I feel like some people are gonna get put out of their means. Mm-hmm. 

0:45:48 - Speaker 3
Quickly. Which is what? 

0:45:49 - Speaker 1
scares me, um, in some of it might not be their own doing, there could be Um layoffs coming where people aren't gonna make their their payments. So I just don't know And that's my curiosity of of how bad this is gonna fall. 

0:46:05 - Speaker 3
Um, yeah, i, as you were talking. I just looked up. You know when the next Meeting is to discuss the interest rate for the us and they said it's supposed to be next week, but they are mentioning, or leaning towards, a skip instead of a pause as far as the interest rate. So pause means it's just on hold and it could possibly go down. Skip means They're not going to do anything this next meeting, but it could possibly still go up later. 

Yeah um, who knows, and I think I just checked our our Federal rate right now is five and a quarter. 

0:46:40 - Speaker 2
Okay, so you're already there. 

0:46:41 - Speaker 3
Yeah. 

0:46:42 - Speaker 1
Yeah, yeah, we've been seeing like in between seven and eights, primarily here. 

0:46:49 - Speaker 2
Right, that's what you have. The same system. 

0:46:51 - Speaker 3
There's a like, a prime number attached to the I think is it one, eight, five or something like that, or one It's close to that. 

0:46:58 - Speaker 1
It's. It's just under two, but I couldn't give you the real, the real number on that one. Okay, are you looking it up? right now I'm trying. Yeah, okay, we'll get the number, but as he's looking, lambrose for you specifically, because we only got like five, 10 minutes left. Sure, so for you, specifically, in your business, are there things that you are you're focusing on till the end of the year or through the summer months to try and get your production up with with everything we just discussed, with everything that's going on? Yeah, Kind of where are you putting your head down? You're saying like, this is where I'm going to hit it hard And this is what I'm going to focus on in order to get me to the end of 2023. 

0:47:43 - Speaker 2
Yeah, Yeah, great question, and that thought has crossed my mind. So I just, i believe I have to go back to basics, back to fundamentals. Look at where most of my business has come from And it's been from my database. So we repeat referral business, so just more connection with my database, you know, talking to people, getting face to face with them or phone calls or something like that, just the basic stuff, you know. I mean we can look at all the the shiny new toys and things that are out there, social media and all these lead gen things that people want to sell you, But nothing beats just the personal connections with people because they have to Sorry, you have to be top of mind with them. 

Regardless of how much they know you, like you or trust you, if you're not top of mind with them, people buy on emotion, right, or they sell emotion. So if someone's in a situation whereby you know they're looking at their mortgage payments month over month, they're going to make an emotional decision. You know, hey, we have to sell. And if they see a place that they like, maybe they were thinking of retiring in a couple of years and downsizing. Well, maybe those plants have now moved up and they go out and they see a condo and there's a salesperson there and they say, hey, you know what? Yeah, ok, we'll buy it, we like this place. 

And then that salesperson says, hey, i'll give you a good deal If you let me sell your house as well, right, so, and that's all. And all of a sudden, next thing, you know, they've got their house on the market. They were good friends of yours, you know, for 20 years. Whatever They say, hey, lambrose, yeah, thanks for checking in, it's great, we actually bought a condo and we're selling our house. I'm like, oh great, congratulations, guys. Like what a slap in the face. Thanks, yeah, you know. So that's why I mean you have to be top of mind with them and then be there before that emotional decision comes in. 

0:49:33 - Speaker 1
Yeah, yeah, and I know you're you're active on social media, which can you let us know, or the listeners know, what your name is on on Instagram and on Facebook? Yeah, I love your active and and you've always got your face out there on there, So yeah yeah, 100 percent. 

0:49:50 - Speaker 2
It's at heart and sold with a DGTA. So it's a play on words, right, heart and soul, heart and sold. And GTA is the area that I'm trading in, so Toronto is the greater Toronto area, because I'm just outside of Toronto, so that's where the GTA comes from. So I'll put it in the chat. So just make sure there's awesome. 

0:50:11 - Speaker 1
Yeah, and we'll put that in the show notes as well, because you always have content going out. Our last two guests have been big on social media And I know that, that you talk about face to face stuff. So for all the new agents going in and I'm sure John from last week would tell you the same thing The social media getting your face out there is good, yeah, but, like you said, nothing beats the face to face or the personal connection to it 100 percent. 

0:50:37 - Speaker 2
No, no, i agree. I can agree more. I have gotten some business from the social media, but most of my business has come from face to face stuff like repeat and referral people that I know in my database for sure. So social media is a good way to get people into the database right And then actually they're going to transact with you at some point. 

0:50:56 - Speaker 1
Yeah, and is your database all built up on people that you either got referred to or have met, or do you use one of those software systems that generates leads and does all that? 

0:51:08 - Speaker 2
No, i'm not a big fan of, you know, online generation of leads. I have tried that. I get my toe into that And the quality of leads that you get, they're not great, you know. Having said that, i have had some success as well, so it's like a toss of the dice, but I'm not sure, like I haven't crunched the numbers, i'm not a numbers guy in that respect, so I don't know what you know, the ROI is on that and the money I've spent, you know, in terms of getting an actual deal And if it's worth it or not. Yeah, i can tell you from the ROI, from the database, is probably much higher because there's just it's free to talk, pick up the phone and talk to somebody, right, and it's free to make a post on Instagram and things like that. 

0:51:57 - Speaker 1
So yeah, yeah, in the. The one thing that I've gotten away from and in this was kind of my thought process when I started was in me and Dan. We worked at a different company, we were both in sales and I was in sales before that. I feel like ever since I got out of college I was in sales And the one thing that always kind of bugged me was when manager would talk about ROI with leads and stuff. 

Sales is very hard to calculate an ROI, a true ROI Because, yes, i can say I spend $15 a month on the software system. My time for all my calls is X, so I can quantify that. But when I sit down and have coffee with somebody or have a great conversation on the phone who leads to two other leads, like, yes, that phone call in total might have costed me three dollars, but what is like the true ROI of a personal connection in a relationship with the person, which is what sales is? It's a personal connection, so it's it's kind of tough. I feel like they have to create some sort of like ROI is for the, the accountants Like the numbers. 

0:53:09 - Speaker 3
The numbers. Is there a different way to like define that? So like, when you say ROI, it's obviously looking at the business side. If you were your own independent sales, like we had to do, i look at it as cost of acquisition or cost of. So like, like you said, if we go out to coffee, the cost of the cup of coffee when you're sitting there, you really don't. You're not getting paid an hourly rate to be there. 

It's just at the end, what did? how much time did you put in? What was the your net return or your your commission on that? And then if you spent 22 hours on, you know, acquiring them, you divide that by your, your commission, you're like, ok, what was that worth it? Then you, you could, you could go so down. I had to get a get, to get gas, had to get a car wash. I had to do this on the way they like. there's so much stuff. 

0:54:01 - Speaker 1
That's right. So there's like you. 

0:54:03 - Speaker 3
You know you can almost get lost in all of the analytics behind it. But if you're more efficient, like you said, if you utilize that one person, you say, hey, you know, if you're not interested in using my services, no harm, but you have, you know, a couple of referrals you could ask me of, and that was one thing that I think I took away and that is Beneficial to building your own book of business, in whatever field. Yeah because referrals are huge Yeah. 

0:54:28 - Speaker 1
And, like you're saying, it's just not, it's not a simple equation that you can come up with quickly. So, lambrose, and your defense for you not to know your ROI. I get it Because if, if I go out to coffee and they don't work with me but they refer me to somebody else and that person five year later refers me to this person. 

yeah, but they're a property manager and has 50 apartment complexes. Do I chalk that up to my first coffee meeting with the person that didn't work with me Exactly, Or did I just do what I had to do to make my connections and connect with you? 

0:54:58 - Speaker 2
100 percent, 100 percent. I have a guy who reached out to me first met him 10 years ago. I was handing out some flyers in a neighborhood and he was happened to be in his garage, right. So we just struck up a conversation And since that time I put him in my database, just sending him, you know, monthly email updates. And all of a sudden he reaches out to me And he's like hey, you know what, you know, my, my, my mother's sorry, my sister, my wife's mother, passed away and now they want to sell their house. You have some time to come and take a look, kind of thing. Yeah, so you never know, yeah, you never know where this business is going to come from. 

0:55:35 - Speaker 1
Yeah, i just had the, the builder that helped me build my house. We'd kept in touch but I had never sent him anything about agency or buying, selling. And a couple of years ago he had reached out and said oh my, my parents have passed, they're going to sell the house. We just wanted to come to you because we know that you're an investor and would you be interested. And I said, oh, i'm also an agent, would you? we can do this two ways. I can give you a letter of intent of buying your house, so at least you know the house will sell by this date. 

But I'm also an agent and I think on the market you can get more money. So do you want to go to the market with this letter of intent in hand? So we'll put on the market. If it doesn't sell, i'll buy it. Or you can go on the market. The market is super hot right now and you can try to get top dollar for it. So I worked with them. I wasn't, they weren't even in my marketing. I paid him to help me build the house and it came with the real estate deal. 

So, yeah, you never know how it's all going to turn out, you just got to be very persistent. put your face out there and connect with people, And exactly like I said. 

0:56:49 - Speaker 2
you just got to be top of mind with these people and be there whenever the time comes for them to make that decision. 

0:56:55 - Speaker 1
Yeah, Yeah, well, keep it up, keep busy, stay cool, stay out of the fire. 

0:57:02 - Speaker 2
Thanks, appreciate that. 

0:57:04 - Speaker 1
And we're going to check back with you, probably in the fall, just to see where everything shook out in the greater Toronto area. Sure, yeah, sounds good, awesome. Well, i appreciate your time. 

0:57:18 - Speaker 2
Thanks, thanks guys, i appreciate it as well. Thanks for having me on. It's always, it's always fun, thanks. 

0:57:22 - Speaker 1
Yeah, always great having you on, so we will talk to you soon. Have a good weekend, you bet You too. Take care, guys See you. 

Transcribed by https://podium.page