Immigration, Inflation and Real Estate Cycles

By: Lindsay Smith

Immigration, Inflation and Real Estate Cycles


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Looking back to the late 1980s and some of the leaders in Real Estate I admired, one man constantly comes up. Guy Leblanc. Picture a chubby, bald, middle-aged man who wore a white suit and drove a white Cadillac. You get the picture. However, he was very wise.

What I learned from him can be illustrated by a quote, I have made reference to a few times in my blogs by Warren Buffett; “It’s not about timing the market, it’s about time in the market.”

Wise investors know that long-term holding is the key to a growing asset. The shift in public perception over the past few years is that Canadians should view homes as a place to live not as an asset. I feel very strongly against this belief, as so many Canadians rely on equity in their home to help them in their retirement years. A quick check with Statscan shows that about 37% of Canadians have pensions, which means that homes are still a key savings vehicle.

What home ownership and retirement plans have in common is compound interest and the belief that at a future date, the asset will be worth dramatically more than it is today.

This brings us back to the current Real Estate market. If we believe that the values of homes will continue to increase over the coming years, getting in is critical, hence the saying “time in the market.” One thing common to most people is that we have short memory and have a hard time separating emotions from logic when it comes to trends. This is visible when you see people buying stocks in a company when the values are rising quickly, getting caught up in the emotion of a big payoff like so many others are doing. When a person understands the economy’s cycle, they can sit back and make long-term decisions based on long-term results, not forgetting about, but not being concerned with the day-to-day drama of a stock, mortgage rates or the value of a home.
The mortgage rates have risen dramatically since the beginning of 2022, and as shocking as they seem, when you look back to previous times, some patterns or cycles can be seen.

In June/1980 the mortgage rates were 13% and on the rise. 15 months later, Sept/80 the rates had spiked to 21.75%. Then we saw the cycle reverse and by March/83 the rates had returned to 13%. All in all, within 3 years the rates returned to where they were. Not only that, but at the end of the 3-year cycle, the values had increased by 35%!

Will history repeat itself over the next three years? Time will tell. This may be the best buying opportunity in the next decade. Predicting the future is a bit of guesswork, some intuition, and the reading of past trends. What we do know is that over the next five years Canada will have 2 million immigrants making their home here and half of them will settle in the GTA. With demand spiking and supply low, the values will increase, like the spike in inflation we have currently.

With eyes on the “long game” and a short-term plan in place buying a home for a first-time Buyer is one step toward setting themselves up for the future. Placing a fixed 3-year mortgage on the property and then reassessing where the rates are nearing the end of the term is the best plan I can see to build equity.
This is an excellent time to buy – either your first home or to move up to a home when you have outgrown the home you live in. It all starts with getting a “foot in the door” of home ownership.

If you are curious about the future of Real Estate or are planning on buying or selling a property I can be reached at

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