My Grandmother, born in Naples, Italy, was a real artist in the kitchen. She came to Canada with her husband Corrado (my namesake), and my Dad when he was 16. They came from an area of Italy which, after the Second World War, was annexed by Yugoslavia. You see, the former Yugoslavia had a score to settle after WW1, and because Italy chose the wrong side in WW2 they had to relinquish a section of North East Italy to Yugoslavia.

So my grandparents, with a teenager in tow, found themselves without a country, and when you are country-less you are considered a refugee. They ended up in a refugee camp and lived there until they were granted an opportunity for citizenship in Canada. My Dad was kind of excited by the prospect of coming to Canada, and in particular Southern Ontario. He found a world map and drew a straight line from Southern Ontario to Europe and found the longitude line which crossed Lake Ontario also crossed through central Italy. Growing up in the northern part of Italy, he knew there were palm trees in central Italy, so he thought he was entering a very Mediterranean type climate directly across the Atlantic Ocean in Southern Ontario. The first example of when you are smart you are really stupid (I am not insulting my current Dad, but his sixteen year old version of himself). There are 5 factors which make up climate, (longitude isn’t one of them) latitude, altitude, relief, currents and winds, and the distance from the sea. Southern Ontario, as some of you may know, has all the non-Mediterranean aspects of climate. Anyway, when he touched down in Canada, and in particular a town named Streetsville (a more bland name of a town has never been conceived), he found something a little different.

My Grandmother, as a new immigrant, had very limited resources, but food and meal preparation became a centrepiece to their family life, and she made recipes that were reminiscent of the land they had left. One thing my Grandmother made was panzerotti. Panzerotti are little savoury turnovers filled with mozzarella and fresh tomato, which are fried in oil, and are a staple in the Puglia region, where my Grandmother grew up. For any of you who were fans of the NBC show Parks and Recreation, they are mini calzones. My Grandmother bought a wok to make these when I was a kid. (The wok’s concave design lent itself to frying these so-called pizza pockets to perfection). She would make these little pillows of greatness, stuffed with fresh tomato, cheese and basil in a wok on her gas stove.

Now let's fast forward to the summer of 2022, when I, the grandson of an immigrant family, decide to be smart but really stupid. I am the proud owner of a Green Egg. I bought myself a Green Egg Wok to fit inside my egg. I come up with the smart idea that I am going to fry the pizza pockets outside, and avoid the odour and the mess of deep frying in doors. Smart right? Well, I left the wok partially full of oil, tested a piece of dough in the oil and it was perfect, crunchy on the outside and airy and light on the inside.

I left the oil for approximately 3 minutes, and when I came back, I found flames which were about 9 feet above my Green Egg. The flames got so high that they hit the branches of an evergreen tree above. For any of you who have been in that type of situation, your mind moves fast but your body moves slow. All I could imagine were fire trucks and burnt trees from my house all the way to Brant Street if I didn’t get my act together. The news that night would show a photo of me with a blanket around me sitting on the curb outside my half burnt house, and the caption would be ‘Major fire in Burlington started by a foolish cook and a pizza pocket’. I wasn’t going to be that headline, so I acted quickly and crisis was averted.

Like my 16 year old Dad who was singularly focused on longitude, my makeshift barbecue deep fryer was also based on a singular focus, which lead me to think that the current opinions on the housing market share that singular focus theme…..blame the market’s performance solely on interest rates.

If interest rates were the sole driver of market activity, why was 2018 such a sluggish year, when the Bank of Canada’s overnight rate was half of what it is today? And in 1988, when the real estate market was red hot and climbing, the Bank of Canada is overnight rate in July of that year was 9.28%? If you use your trusted friend Google, and ask ‘what are the key factors which affect the real estate market?; it will usually spit out demographics, interest rates, the economy, government policies and supply and demand. Blah, blah, blah!

We as realtors and consumers love to demonize one factor for our woes, but not only is it a combination of many factors out of our control, there are strong tactics and opportunities at any moment in time in the market cycle. It is true that the market that took off like a rocket in January, February and most of March of 2022. A seismic shift began with one itty bitty quarter point (.25%) increase on March 2nd 2022 from the bank of Canada. This 25 bases point increase, leading to a flurry of opinion and much dialogue around housing. How do we survive the cloud of uncertainty in the market, and make sense of it all?

The following is my Fall 2022 (or any season in any year for that matter) Survival Guide To Real Estate

1. For crying out loud, if you are buying and selling in the exact same period (there are few exceptions), what are you worried about? Your life’s situations transcend the market lows and highs. If you are buying and selling in a low market, so be it. If you are buying and selling in a fast market, so be it. Nothing lost and nothing gained. In today’s market, Buyers can actually do a home inspection, and buy with a condition of financing and have a sale of house condition as well. continued on next page.

2. Get your hands on the best quality information you can, and stop looking at average price. As price sensitivity enters the market, so too do consumer buying patterns. Condominium apartment style sales, which are lower priced inventory can pull down the average price. An influx of upper end demand in an area can push average prices higher. It’s known as the ‘composition effect’, and it taints average sale price numbers. The Home Price Index (HPI) and the Benchmark Price, which are provided by the Canadian Real Estate Association is a real time granular information source when it comes to the pulse of the market. This tool will help you navigate trends, and will show when and which types of properties are beginning to level off and trend either upwards or downwards.

3. Months of supply and end of month inventories will give you better insight into the particular market you or your client are looking at. Days on market is really a false positive because of all the canceling and re-listing agents are doing these days. (Look at cumulative days on market instead). Monthly unit sales of homes divided into the number of new listings, can also give you a realtime factor on demand, and is the chief indicator of whether we are in a buyer, seller, or balance market.

4. Look at new construction numbers where are we today as opposed to last year? Look at pre-pandemic housing start numbers as well. Household creation is growing rapidly in Canada and the US, fuelled by immigration and the Baby Boomers' grandchildren starting their own families. If this supply continues to fall short, there will be upward pressure on existing housing stock and on rental rates.

5. Waiting for home prices to drop further and consumers to walk away from their homes can prove to be a counter productive strategy. Ask yourself, can the current low unemployment numbers last forever? I can’t answer that, but I can tell you as long as home owners are employed, they will re-align their spending and keep their mortgages up-to-date. There is little to no correlation between rising interest rates and mortgage defaults, but there is however, a correlation between high unemployment and mortgage defaults. Currently, unemployment is at 4.9%. It would take a substantial increase in unemployment to trigger a significant home sell off. That could take several quarters, and by that time, inflation could have turned the corner, and interest rates could begin to decline signalling a market increase.

6. Keep an eye on the bond market. Usually a drop in bond rates mean long term fixed rates will follow. And we have seen some recent movement downwards in the US and Canada. However, the US Federal Reserve just had a meeting in Jackson Hole, Wyoming and Reserve Chair Powell came out swinging. He was clear that inflation must be curbed and interest rate hikes are the only way to do it. Bad news for us Canadians, because the Bank of Canada takes several cues from the US Federal reserve. On September 7th, the BOC will make an interest announcement. The stock market in the US took a nose dive after Chairman Powell’s press conference. The stock market was assuming that once there was a sign of inflation retreating, mortgage rate reductions would follow. Powell shut the door on that one.

Interest rates are but one factor, and we have to plan around them for the foreseeable future. Go variable. Choose 2 year or 3 year fixed etc. There are other factors at play here which make up the Canadian housing market. I can say that prices are beginning to stabilize in various pockets in Southern Ontario. To be able to predict when the BOC will reverse its interest rate increase policy is very difficult. We have already begun to see some properties in some neighborhoods being sold in competition, appointments are on the rise, inventories are shrinking, and markets moving out of balance towards Sellers.

When the BOC does reverse its policy to fight inflation, home Buyers and Sellers better fasten their seatbelts. If an increase in interest rates of 0.25% set this new market trajectory in motion, I hate to see what a ‘no increase’ in interest rates will do to the market in a very short time. If that is your singular reason for staying on the sidelines you really are…(forgive me)….stupid.