Moving Up in Real Estate

Loving real estate is easy.
From sipping wine and watching Netflix, to opening Christmas presents with the kids; the comforts of home are recognized by us all.
The feeling you get when you get to sleep in your own bed after being away probably has more to do with being home than the bed itself. We find comfort in where we live. Let’s face it; “home sick” isn’t an exaggeration. From family traditions to making memories, home is where we create many of our special memories.

So why do I keep pushing goodness to the side and bringing up the investment part?
Everyone must think I’m a cold-hearted business man. I’m all heart, I can assure you, and as I write this article I think of all the special memories I’ve made in my own home. But, after investing in real estate for 24 years, I am very aware of not only my fondest memories for where I live, but the outstanding investment in the homes I’ve lived in. While I have been investing in real estate for all those years in the hopes of creating a balanced portfolio, I have also tried other forms of gaining a return on my money. There is no sugar coating it. Nothing comes close. When I factor in that my house is one of the few investments I can have that’s tax free, it’s a stratospheric difference.

I work with many different clients, and often clients selling at the retirement age…
It’s amazing how many people have the majority of their net worth tied up in their principle residence, which couldn’t be in a better spot. It’s a completely insulated tax shelter. But did they make the most of it? Did they live in a home just below what they really wanted so they could match their company RRSP investment program ?Maybe they always wanted a pool but never had one because the fear of being “mortgage poor”. Let’s face it, we all have financial restrictions for what we can and can’t afford.

However, I think we all know we probably waste a little too much money here and there that could likely make up the difference from going from one house to another. Not to mention over time your house value rises (always has), therefore you are creating a larger tax free return.

Think about this for a second:
Guelph has historically been a city you can count on for a return on investment in real estate. Yearly appreciation in home values have averaged at 7.23% a year over the last 10 years (see table below) in detached homes.

To make things easier and to use a whole number let’s just play with this scenario: using a 5% appreciation this year, the numbers below are the tax free income essentially being built into your equity in the home:
500,000- 25k
600,000- 30k
700,000- 35k

Going into a 700k home saves the owner 35k a year tax free. Let me ask you this; how many people can save 35k a year? Tax free?
It impossible. So many people are in such a hurry to pay down their mortgage because that is the true way to get wealthy and to not have debt, and in doing so they live below their comfort level for this goal, while in the meantime they limit the compounding properties of owning a better home, and getting more enjoyment out of the place they spend most of their time in.

A home doesn’t have to be big to be special, but you cannot ignore the importance of the investment.
Make smart decisions with your money, protect your family and make the most out of what you have, but look deep into the numbers.

Conclusion
Buying the house you want, may not be risky at all, in fact it may be the best investment you ever made.

February 19, 2025
Guelph is a fantastic place to enjoy outdoor winter activities, and tobogganing is one of the best ways to embrace the snowy season. Whether you’re looking for a gentle slope for the kids or a thrilling ride down a steep hill, Guelph has plenty of great options. Here are some of the top spots for tobogganing in the area:  1. Exhibition Park One of the most popular tobogganing spots in Guelph, Exhibition Park offers a great hill with a moderate incline, making it ideal for families and younger children. The park is centrally located and has plenty of space for winter fun. 2. Mollison Park Located in the city’s west end, Mollison Park features a well-known sledding hill that offers a good mix of fun and safety. The hill isn’t too steep, making it a great choice for all ages. 3. Kortright Hills Park For those looking for a longer ride, Kortright Hills Park has a fantastic slope that provides a smooth and enjoyable run. The park’s natural setting makes it a beautiful spot for winter recreation. 4. MacAlister Park Another family-friendly location, MacAlister Park has a gentle slope perfect for younger children who are just learning to enjoy the thrill of tobogganing. It’s a quieter location, making it a great place for a relaxed outing. 5. Riverside Park This popular Guelph park has a designated tobogganing area that attracts sledders from all over the city. The varied terrain provides options for both beginner and more experienced riders, making it a great all-around choice. Safety Tips for Tobogganing Always wear a helmet, especially for young children. Ensure the hill is free of obstacles, such as trees and rocks. Sled during daylight hours or in well-lit areas. Dress warmly and wear appropriate winter gear. Supervise children at all times for a safe and fun experience. These top tobogganing spots in Guelph offer a range of experiences for sledders of all ages. So grab your sled, bundle up, and enjoy the winter season in one of Guelph’s best tobogganing locations!
February 19, 2025
With discussions surrounding potential tariffs on Canadian imports, stakeholders in Guelph’s real estate market are evaluating the possible consequences. If implemented, these tariffs could significantly affect housing costs, development projects, and market dynamics in Guelph and the surrounding areas. Possible Increase in Construction Costs One of the most immediate impacts of tariffs would be rising costs for construction materials such as lumber, steel, and aluminum. Since a large portion of these materials is imported from the U.S., tariffs could lead to price hikes, ultimately increasing the cost of building new homes. If material prices rise, builders may pass those costs onto buyers, potentially adding thousands of dollars to home prices. Industry experts predict that if tariffs are introduced, the additional cost per single-family home could range from $10,000 to $25,000. Potential for Higher Mortgage Rates Economic uncertainty caused by tariffs could influence the Bank of Canada’s interest rate policies. If inflation rises due to increased costs on imported goods, the central bank may opt to raise interest rates to curb inflation. Higher interest rates would directly affect mortgage rates, making borrowing more expensive for homebuyers in Guelph. With rising mortgage costs, buyer affordability could take a hit, leading to reduced demand and a slower real estate market. Those looking to purchase a home may need to reconsider their budgets or lock in rates before any potential hikes occur. Possible Slowdown in New Developments Developers in Guelph may hesitate to launch new housing projects if tariffs increase construction costs. A more expensive development process could lead to project delays or cancellations, tightening housing supply in an already competitive market. If fewer homes are built, demand for existing properties could rise, potentially driving up home prices. This would further strain affordability for first-time homebuyers and those looking to enter the market. Housing Market Uncertainty Even before any tariffs are imposed, the uncertainty surrounding trade policies can impact market confidence. Buyers and investors may adopt a wait-and-see approach, slowing down transactions and cooling off market activity. Conversely, if there is speculation that tariffs will push prices higher in the future, some buyers may rush to secure homes before the impact takes effect. This could create short-term market volatility, with a potential surge in demand followed by a slowdown. How Buyers, Sellers, and Developers Can Prepare Homebuyers : Consider securing mortgage pre-approvals early to lock in favorable interest rates before any potential hikes. If tariffs are implemented, it could make homeownership more expensive in the long run. Sellers : Monitor market trends closely. If tariffs lead to increased costs and reduced affordability, selling sooner rather than later might be advantageous. Developers : Explore cost-efficient alternatives for sourcing materials and streamline construction processes to mitigate potential price increases.  Conclusion While tariffs have not yet been imposed, their potential implementation could bring significant changes to Guelph’s real estate landscape. Rising construction costs, potential mortgage rate hikes, and a slowdown in new developments could all impact affordability and market stability. Buyers, sellers, and industry professionals should stay informed and prepared to adapt to possible changes in the housing market.
By Hudson Smith December 18, 2024
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