As a third-generation realtor who helped his mom field offers at the kitchen table as a seven-year-old, Tyler McLay offers his clients one thing we need in a collectively anxious world – transparency.
The Royal LePage sales representative always makes sure the timing for buying a home is good for his clients. He is committed to giving them his honest advice in every scenario and that they – not him – make the final call.
He views his job as one of education and advice, not as an order taker or messenger. McLay lives and breathes real estate, working 12-hour days to make sure he’s up to date on the market, which makes him the ideal agent to answer this week’s question.
What are you advising homebuyers to do during the second wave of the pandemic?
At a high level, I tell homebuyers to proceed with cautious optimism.
What I mean by that is the fundamentals of the Toronto real estate market are solid. The economics are solid, the monetary policy is solid, and the banking system is solid. The cautious part of cautious optimism is more of a personal caution: whether or not the buyers have job security, if they are confident in their ability to earn a steady income, and thus confident in their ability to qualify for a mortgage.
Buying a home is arguably going to be the biggest purchase these people will ever make in their lives, so the personal element is huge. It’s got to make sense for them. With caution, I mean I want them to educate themselves and know what’s involved in a purchase. There are agents out there that don’t fully understand what’s involved themselves. There’s the land transfer tax — and in Toronto, it’s higher than it would be outside the Toronto municipality — there are lawyer fees, and if you lock yourself into a five-year mortgage and you decide you want to have a child and move out in two years, there are huge mortgage penalties.
The caution is meant for the buyer specifically to assess their profile and make sure they’re ready to buy – make sure that they themselves, themselves and their partner or themselves and their parents (if they’re getting family help), are ready for the commitment to buy.
But in terms of the market, in the second wave, I’m optimistic. I think Toronto is a world class city with job growth, immigration and universities that attract students from all over the world.
I’ve been giving my clients — many of whom are investors and younger millennials — the exact same advice from the very beginning of the pandemic. I say, ‘Look, if there’s one thing we can learn from history and other disasters — even though there’s nothing that’s ever been experienced at a global level at this scale — when you look at what our government has done at a municipal, provincial, and federal level with assistance for small businesses, assistance for homeowners, assistance for tenants and landlords, they’ve done a phenomenal job in that respect, when it comes to supporting our economy by lowering interest rates and making fiscal and monetary policy adjustments, those actions have maintained a healthy market and have enabled Toronto real estate to remain incredibly strong.’
We’re seeing the results of low interest rates and pent up demand acting on a new supply of real estate. There are a lot of healthy transactions taking place in the market. It’s not a financial crisis, it’s a health pandemic, so there are no underlying issues in our financial system. This pandemic is nothing like the 2008 recession in the U.S. when people were over-leveraged — that was a money problem. In this case, it’s the question of the unknown and how big this pandemic could be, what kind of job-loss is at stake and what other question marks still remain. In the second wave we understand COVID-19 a lot better in terms of what it is and how to combat it, which gives people a little more confidence in every aspect of a fiscally sound society, including job growth and immigration. In the Toronto market, immigration is one of our biggest drivers, so one of the biggest concerns is whether we can get the immigration rate to pre-pandemic levels.
I think we will. We have an incredible plan to bring 1.3 million immigrants to Canada over the next three years and that’s great news. Plus, a lot of the effects the pandemic has had on real estate have been positive, like lower interest rates and developers being forced to innovate and compete more. For the last 15 years, we haven’t seen much innovation in pre-construction condo development. When you have a crazy amount of buyers, it doesn’t matter what your product is, people are snapping them up. But now, the developers will be forced to integrate technology or some better environmental practices to attract buyers, so I think the pandemic is a big positive in that respect.