Introduction
This week is another big data week. Business outlook? Down. CPI? Low. And get this – there’s a 90% chance of a rate cut in Canada next week.
Now, add this to one of the weakest summers in a long time for Toronto real estate, and multiplex deals are looking pretty lucrative out there. Let’s break it all down!
Bank of Canada's Q2 Business Outlook Survey
The Bank of Canada just dropped their Q2 Business Outlook Survey, and it’s pretty gloomy. Canadian businesses aren’t worried about inflation or recession anymore.
Instead, they’re all doom and gloom about sales and freaking out about taxes and regulations. Why? Probably because of what the government changed with capital gains taxes last quarter.
Rate Cut Probability Skyrockets
Before this survey, the chance of a rate cut was sitting at 60%. After yesterday’s survey? 80%. But wait, there’s more! This morning, CPI comes in lower than expected, and suddenly we’re looking at a 90% chance of a rate cut on July 24th.
Breaking Down the June 2024 CPI
Let’s break down the June 2024 CPI real quick:
- Goods prices? Slowed an insane amount.
- Food inflation? Pretty stable.
- Energy? Also super low, but the BoC doesn’t look at this.
- Services? This is high, but this is a lagging metric and the outlook survey shows that businesses aren’t as concerned about wage moving forward.
Here’s the kicker: Mortgage interest is still insanely high at 22.4%. But strip that out? CPI is at 1.9% annually. And on a monthly basis, we’re in deflation!
Toronto Real Estate Market Update
After the June rate cut, sellers are jumping in, but buyers are still hesitant. That’s why Toronto prices for freeholds have been falling in June. Detached homes? Down 4%. Semis? Down 9% from May to June.
Condos and houses are NOT the same. Condos are much more oversupplied, they have low rent yield and very few value-add opportunities. On the other hand, the government is all about “missing middle” housing, trying to increase density in neighbourhoods with houses.
If you buy a single-family home and convert it into a multiplex, your cash flow can go from negative to positive. With a 10% discount in today’s slow Toronto summer market, plus fixed rates dropping from 5.2% to 4.9% or even lower, your cash flow gets a further boost. Even if rents dip a bit, you’ve got a buffer.
How We Can Help
Our Toronto real estate sales brokerage specializes in buying and selling investment properties across the city, particularly houses and multiplexes. We can help you:
- Assess your situation
- Teach you how to identify good investments
- Find the perfect property for your goals
- Connect you with reliable contractors for renovations
- Coach you through project management
- Handle property rental and management
Ready to dive into Toronto multiplexes? Let’s chat and explore these lucrative opportunities together!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
