Is There A Housing Bubble? An Interview With Richard Weima

By: Dana Gain

Is There A Housing Bubble? An Interview With Richard Weima

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Transcript

DANA:
Today we're talking to Richard Weima, brokerage manager for Right at Home Realty Burlington. Richard has spent his entire career in real estate, and we are very pleased he's able to join us today to help us better understand what is happening in the market. Welcome, Richard. And thank you so much for joining us today!

RICHARD:
Thank you for asking. I appreciate being here.


DANA:
Shall we just jump right into the questions then?

RICHARD:
Let's get started.

DANA:
We've seen a huge increase in home values in the past 12 months, as you know. Do you think this is helping to propagate consumer concern about a housing bubble that's about to burst, or the market crashing? What are your thoughts on this 'housing bubble'? 

RICHARD:
The use of the term housing bubble has really been media-driven, more so than the point of view of experts in the industry. The trends - certainly with rising values so rapidly - has made some people nervous. But I think the increased demand for housing along with reduced supply has trended prices up higher, and that makes some people nervous.

Certainly it can be considered a bubble when we see prices rise so quickly. But the values are there in the sense that if you're for instance a move-up buyer, what you get for your home is going to help assist you in getting a bigger and better home. The equity is there and it's really transferring into something more upscale.


DANA:
So it sounds like this is a rare instance where, despite the fact that housing prices have gone up quickly, it shouldn't concern people just in and of itself because there are other factors that lend themselves to sort of creating this phenomenon. Like COVID, the mortgage rates and you know, landlords not re-renting and they're selling the property to pull out their equity. So there's all these things going on. So it sounds like all of that is, is playing a part.

RICHARD:
It is playing a part. It's almost inflationary in a sense. But we are also seeing an increase in population, much more need for housing. But now it's we seem to be on certainly on a track where more of the housing is being made available and certainly the people requiring housing or investment in real estate has increased dramatically.

DANA:
Back to the question, we've been seeing April, May, and June, we have seen the market start to cool. Does that mean home prices are dropping? 

RICHARD:
No, it doesn't. Although number of units sales has dropped, and we've seen that has been the recent effect of not having enough properties that meet the needs of the of the buyers out there. So the units listed are beginning to come back up again and we'll probably see another market in the fall.

A lot of this is seasonal, too, let's not forget during the summer time and plus with our current COVID situation, people are getting out of the lockdown. It affords now the opportunity to get out and do other things that we have really wanted to do for some time. Because of the summer season, we're out doing other things. So real estate is still kicking.

The values are still there and they're rising. It's still competitive to try to get in on that supply.


DANA:
It's so important what you say, because the market is cooling, that does not equate to prices dropping. It just means that there's a little less activity and people are paying a little bit less than they were over asking price, but that doesn't mean the price of that house has gone down, right? 

RICHARD:
100%. Sellers out there are not expecting a price drop. They're not seeing a lack of buyers wanting to purchase their property and with that sort of competition, you're going to see obviously a buyer step up with the capability to purchase that property.
 
That sort of opinion of 'blowing up' or a 'bubble' tends to be a lack of confidence in their bet. So from the standpoint of, if you're looking for speculative - if you're speculating in a sense on a real estate deal or transaction where you expect to get a profit quickly and turn around quickly, then that might be what many people are trying to do. And especially in markets like this where it's a fast increase in value. But if that concern is brought about because of quick turnover - it's important to understand that real estate investment is long term, or should be considered more long-term. There are many ways to invest as we talked earlier, whether it's recreational retirement or anticipating other sort of needs for your future personally.

But having a real estate investment is really a key focus of a lot of people today, and that seems to be continuing. 
 

DANA:
I can't imagine how it is for first time buyers in the market right now. 

RICHARD:
First time buyers, let's talk about that. Because for first time buyers it's a great challenge to try and find something that they can afford. Now, this has also caused from the perspective of those that are investing in investment real estate, there is a need for housing, and for the ability to save. So this has, I think, improved a lot of new home investment for new, first time buyers.

A lot of people are recognizing that they're going to need some time to save up for that down payment, to get a better opportunity to try and find a property to buy. So, new homes is obviously a big part of our marketplace that affords that opportunity. 


DANA:
So what do you tell first time buyers, yourself? 

RICHARD:
I think back to when I was a first time buyer. Back in those days it was 'nothing down' opportunities, and the prices were obviously quite different. But interest rates were 13-14% so there's always a challenge to get that first property. I think when we think back, all of us, that first time buy was very difficult. It was not easy.

Sometimes you could incorporate help from your family, which I did. The purchase of my first home, the mortgage was held by a relative. So these are different things and opportunities as well. In terms of secondary real estate, the investment is to assist your kids, your family. So, fight to get that first home.
 

DANA:
Let's pretend for a minute I'm your best friend. You've known me for many, many years and I've come to you for advice. I ask you, "Richard, I'm ready to make a move, but I'm worried that if I buy now, my home value is going to go down before it goes up." In your expert opinion, is that a valid concern? 

RICHARD:
Well again it gets back to what we talked about earlier which, for my way of thinking, is speculative. So if you're thinking of home ownership in terms of a shorter-term, quick flip sort of concept then yes, you might want to be concerned, because real estate is cyclical.

What that means is sometimes the prices go up, sometimes they go down. In the last 25 years, they've done nothing but go up. And so maybe this is where the talk of bubble comes in. But the demand for that housing increased by immigration and by demographics. The increased need for housing has just gone nothing but up, but the supply has not been met. There's government reasons why it hasn't been met in terms of red tape, allowing for construction and new home building, that that that has had that effect.

So if you're if I was to advise you, I'd say buy, but don't buy speculatively. If you're looking for a place to live and you want to invest in something that's solid like real estate, which it is, then that's what that I wholeheartedly would recommend you do.

What are the other options for investment? Today, mortgage rates are 1.99 so it's almost like the money has no value. So, real estate is in my view, the best investment to make and I would make it today, because tomorrow you might not be able to. 


DANA:
Obviously it, it's going to sound self-serving for two people in real estate to recommend that people buy. So, what would you say in that case? 

RICHARD:
Well, here's my experience. In the past when I was selling, Ialways had conscientious concern for my buyers and clients and I had experienced the downturns. I have gone through recession, I have seen
higher spikes of interest rate, and I have seen people lose their home. I have seen that.

But what I've learned is that when I got engaged with discussions about those kind of concerns, I prevented some people from investing in real estate that in the long run would have been the way to go.

If you look at the most recent dramatic recession, 2008, it was just a blip in time. And so the fact is if you're looking to buy or need a place to live and stay and want to invest in that, there's been nothing better in the way of a return in terms of a long-term investment than a real estate property.


DANA:
So, Richard as the brokerage manager of Right at Home Realty in Burlington, you clearly have a lot of experience. Is now a good time to buy?

RICHARD:
This is your decision, this is your investment. It's almost like a personal question, you know, is this the right time to buy fall for me? Yes, it is. This is what I want. So when you're asking me a question as a realtor, is this the right time to buy from my experience? Yes. Now is the right time to buy. Yesterday
would have been better, tomorrow maybe not as good. But in terms of long-term thinking and investment with affordability, now is the right time to buy. 


DANA:
Before we wrap it up today, then is there anything else you think people should know about what's happening in real estate this year? What do you think people should know that are watching this? 

RICHARD:
Well, I think they know a lot more about what COVID has done in terms of our life, and lifestyle, and plans. And so I think there's much more calmness and much more educated opinion out there, and relaxed opinion, and confidence that, going forward, things will be better in the real estate world. So that's good.
 

DANA:
So you are, if I could paraphrase, optimistic? 

RICHARD:
I'm always optimistic. I've discovered that with your conscientious desire to help people not fall on their face, sometimes you might be preventing somebody from accomplishing something that is their dream and is personal and they're able to accomplish it. In the past that's all I've seen, people have benefited tremendously in the pursuit of the Canadian dream of a home. 
 

DANA:
Thank you so much, Richard, we really appreciate your sharing all your wisdom and expertise. I hope we have the opportunity to answer more questions for our viewers with you in the future.

RICHARD:
I appreciate sharing this time with you.***


About Richard Weima, Senior Branch Manager & Broker

Richard's passion for the real estate business began in the 1960s and 70s when he accompanied his father, a premier home builder and developer in Sarnia, to new home sites. It was an exciting time for home ownership in Canada and Richard learned about the industry literally from its foundation. At age 21, Richard obtained his real estate license, gravitating naturally to new home sales and then resale. Sarnia's vast petrochemical industrial base afforded a rich, corporate relocation environment in which he developed appraisal and negotiation skills. Four years later, he was recruited to open and manage the new Royal Trust branches in Sarnia and Chatham. As a young broker of a new company it was both exciting and challenging to recruit, train, and mentor colleagues.

After ten successful years working in the industry, Richard accepted a new challenge, moving to Burlington to manage the Canada Trust office at Appleby and New Street in Burlington. Later, he managed another real estate brokerage in Oakville, increasing its success to the top 21 offices in Canada during very competitive times. 

From 1990 to 2015, Richard returned to his sales career as an award-winning Broker Sales Representative. He was one of the first in the industry to develop his own website and personal online marketing. He was also actively involved in the Oakville & Milton Real Estate Board, as Director, Vice President, and President. Involvement in the Board has provided Richard with another opportunity to learn trends and bring changes to the real estate industry.

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