As I work on my next presentation, for later in the summer/back to school,  (trying to arrange an “Oil” conference” so stay tuned!), I circle back to the real estate market.  I found this chart captured a lot of information that I am often asked about, in terms of what is most likely a series of mortgage hikes, this distribution of households by mortgage characteristics is insightful:

First, it was interesting to me to see the breakdown: Almost two-thirds of Canadians own their own home (renters account for 37% as per the first column).  Renters, and those 28% who own their home without a mortgage, are presumably the ones who are the “least” effected by inflation.  Over time, renters would presumably see higher rent rates, but this is over a longer period of time, as opposed to the food inflation, gas, etc. that we would all face daily.

 

Based on the distribution of households by mortgage type, it’s the households with variable interest rate mortgages, which will be most directly impacted by rising interest rates (about a third of all mortgages outstanding).

 

As investors, we ought to be mindful of this.  I’d encourage everyone to examine their mortgage payments relative to their real estate holdings.  If there is in the next time-period less expectation of increase in real-estate, does this effect your thinking and strategy with respect to investment properties?   It’s been interesting, in the last few months, a few of my clients as well as other friends and acquaintances have for lifestyle reasons, or estate planning and/or simplifying their overall assets, have sold properties, without the intention of immediately buying another property.  It’s the first time in a long time that I can recall this occurring.

 

Long time readers are certainly aware of my affinity for golf (as well as my generally lousy predictions).  I’d be remiss if I didn’t make a prediction for this year’s Canadian Open, sponsored by RBC of course.  As much as I’d like for a Canadian to win, it’s going to be Rory McIlroy who hoists the trophy, at a local course, Royal St. Georges (where I am still waiting for an invite to play!).  Whatever the winner of the Canadian Open will receive, will however pale in comparison to the winner of the inaugural event of this LIV League, where the winner will take home an astounding $4MM: LINK.  Presumably that tour has no “inflation” concerns…

 

Have a great weekend.