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(Jan 6, 2024)

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With all the uncertainty these days, it’s easy to succumb to the negative energy amplified by various media outlets like television, social media, and news publications. The year ahead in real estate, mortgages, and life, in general, will be a rollercoaster ride of challenges and triumphs. However, the key to not only surviving but also thriving lies in recognizing the fine line between acknowledging what is out of our control and empowering ourselves to focus on what we can control and influence. Rather than dwelling on the broad spectrum of things we CANNOT control, let’s shift our focus to what we CAN control: our thoughts, finances, and health. These elements form the foundation upon which we can build resilience and drive positive change:

THOUGHTS: Our mindset shapes our reality. Choosing to focus on the positive aspects of life, personal growth, and the potential for improvement can pave the way for a more favourable outcome.
HEALTH: In the pursuit of a prosperous life, our physical and mental well-being must take center stage. Prioritizing health through exercise, a balanced diet, and mindfulness ensures we have the vitality to navigate challenges.
FINANCES: While global economic forces may sway, our financial decisions remain within OUR grasp. Smart financial planning, budgeting, and investing empower us to weather storms and capitalize on opportunities.

A particularly valuable resource in times of uncertainty is the Andex Chart. If you’re not familiar with it, today’s your lucky day! It’s long been described as the document-version symbol of resilience and growth. The Andex Chart is a visual representation of North America’s key financial metrics since 1934. Click here to be redirected to one of the many available online. The chart illustrates the upward trajectory of good fortune, showcasing how, despite valleys and setbacks, the overall trend is consistently upward. This factual analysis will normalize any pessimistic outlook you may currently be fixated on. Whenever you’re feeling down about your finances, net worth, or business, put your reader glasses on and locate an Andex Chart. Just stare at it. It’s a one-page illustrative diagram that includes virtually every relevant financial North American metric and charts it against global events. For example, since 2020, the average inflation rate is approximately 6.2%, but for the 30 years prior, the average never exceeded 2.1%. The last time we averaged 6.2% was the entire decade of the 80s. Despite challenging periods from 1970 to 1990, Canadian stocks rose by about 24%! And all this amid historic negative events (Arab Oil Embargo in the early ’70’s, 22.75% Prime Rate in the early ’80s, and and the infamous Black Monday of the late ’80’s). Pretty crazy, right? Fear not, and have faith in the sacred Andex Chart. It serves as a reminder that the key to success lies in perseverance and a long-term perspective.

Now, focusing on mortgage holders and their journey of survival, evolution, and thriving, we are approaching a period of transition. Some will transition from sub 2% interest rate mortgages to a more long-term average 5% interest rate environment, as a significant number of mortgages are set to expire in 2024 and continue throughout 2025. Others will enter a market intensely contested and surrounded by conditions and outcomes not seen or experienced in decades. So, if you’re faced with a mortgage renewal in the coming year, brace yourself for the shock of new terms. On the other hand, if you’re about to enter the market, you’re committing to today’s reality—higher interest rates, post-inflationary standards, and crisis-ridden real estate supply and affordability issues. A pessimist might say, “pick your poison.” Personally, I’ll be looking at things from an Andex Chart point of view. What is happening at this time is normal, and it will continue to occur in the future. It’s a time to regroup, to adjust, to pivot. It’s not the end; it’s a new beginning. And with new beginnings come new plans and fresh mindsets.

If you’re a mortgage holder renewing at a higher rate, accept that renewal periods are not always optimal times to lock in new rates and terms. However, maintain optimism. Mortgage renewal time is an opportunity to make changes in your financial situation, without penalties. For those anticipating a higher and unmanageable rate, a simple fix may be to increase your amortization. Or, by consolidating substantial credit card debt or lingering personal line of credit balance, you can achieve a drastic reduction in outgoing cash flow. What may seem demoralizing from a mortgaging perspective could be rejuvenating from a personal finance and mental health standpoint. Amortizations and balances can always be managed and improved over time as interest rates and personal income improve.

If you’re entering the market with your first purchase, accept that you may need to adjust your purchase expectations downward, scale back your current lifestyle, improve your employment prospects, or a combination of these. It’s not your fault that you live in an unaffordable market, but going forward, there won’t be any handouts. Commit to a plan to achieve your real estate goals; get pre-qualified for a mortgage and realize where your shortcomings are. Once again, as exemplified by the Andex Chart, your entrance into real estate may appear challenging at first, but with perseverance and a long-term perspective, the challenge will diminish over time.

For current homeowners looking to sell their homes, whether upgrading to a larger home or downsizing to a smaller one, there are crucial considerations in both mortgage qualification and the real estate market. Upgraders should be prepared for a thorough mortgage pre-qualification, accounting for criteria they likely were not aware of when they last purchased a property. This includes the 2% mortgage stress test, minimum down payment thresholds for various mortgage programs (20% minimum for properties exceeding $1M), the elevated interest rate environment, excessive mortgage break penalties, and non-eligible employment (newly self-employed, change in career path, etc.). Downgraders should also be aware that even though they are looking to purchase a property of lesser value, such as a condo, there are other property expenses that could exceed what they were previously accustomed to (strata fees, special levies, etc.).

As we stand on the brink of a new year filled with uncertainties, it’s essential to recognize the duality of our world—the uncontrollable external forces and the empowering elements within our reach. By focusing on what we can control—our thoughts, finances, and health—we not only weather the storms but also contribute to the upward trajectory of our personal and collective destinies. Embrace the chaos, compete passionately, and let the burning desire for improvement guide your journey. In the grand tapestry of life, the trend is, and always has been, onward and upward.

Want to discuss what 2024 holds for you? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

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