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Rob Carrick
Rob CarrickPersonal Finance Columnist

This article was published more than 1 year ago. Some information may no longer be current.

A reader did something bold recently that will be of interest to anyone willing to look at what’s happening in housing with an investor’s keen eye.

Basically, he made a bet that housing is peaking and that prices will fall. He sold his residential property in Toronto and plans to rent for two years. His question: What to do with the proceeds from the sale while he bides his time as a renter? Let’s crowdsource this one – if you have any thoughts, send them to me at rcarrick@globeandmail.com.

Meantime, let’s consider the idea of getting out of the housing market now, a time when prices are rising 20 to 30 per cent each month over year-ago levels. Anticipation of further gains is a major reason why people are in a frenzy to buy homes right now. Blind bidding for a home and paying over the asking price seems trivial if the value of a home keeps soaring.

But there’s also cause to wonder how much longer prices can keep surging like they have in 2021. When the momentum fades, will prices plateau, pull back a little or plunge in some sort of correction? Housing has made naysayers look bad for a decade or so, but affordability is falling almost by the hour these days.

Timing the market for real estate, stocks and any other asset is almost impossible to do with precision. In selling a home today, you could miss out on another 12-month gain of 20 per cent or more. The case for selling is to take profits, as investors say. Concede that you’re probably not selling at the peak, but take comfort in the knowledge that you have made a ton of money.

Most people aren’t willing to rent after selling their long-time family home. But if you are, there’s an undeniable opportunity to sell at a high point. The question is, what to do with all that money?

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Rob’s personal finance reading list

A pre-approval doesn’t mean your mortgage is a done deal

It’s a basic first step in house hunting to get a pre-approval that locks in a mortgage rate. But in today’s hot market, a pre-approval doesn’t guarantee that your lender will advance the amount of money you expect. Complications are possible. Now for some thoughts on the risk of buying a home with a minimum 5 per cent down payment in today’s hot market.

A Black customer calls out bank-branch racism

All about how staff at a suburban Ottawa bank branch treated a Black customer depositing cheques from customers of his painting and construction business. The customer calls it “degrading.”

The investor who sued his adviser for taking too little risk

This investor thought he was deprived of gains because his adviser was too conservative. The court disagreed, but it did take issue with something the adviser did.

Years of home-price increases packed into the past 12 months

Some stats to put the recent surge in home prices in perspective. “North Bay (Ont.)’s increase in dollars over the past year was similar in size to the gains it made in the 15 years prior.” Yeah, that’s scary.

Ask Rob

Q: I’m approaching 80. Which is better – taking money from a tax-free savings account to pay for a sunroom or getting a line of credit?

A: Assuming you don’t need the money in the TFSA to cover your expenses now or in the future, that’s the better option to pay for the sunroom. Credit lines secured by home equity have interest rates starting in the 2.95- to 3.45-per-cent range, and these costs will rise if there’s a general trend of borrowing costs moving higher. Seniors who don’t already have a credit line may have trouble finding a lender who will offer them one.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

We need your vote

The Stress Test podcast I co-host with Globe personal finance editor Roma Luciw has been nominated by The Webby Awards for Best Business Podcast. This means we were selected as one of five best in the world for this category.

We’re up for two awards, one of which is the People’s Voice Award. You can vote for us here.

It’s a huge honour for our little podcast, created entirely amid the pandemic to be in the running for a global award, and a testament to how much the show is resonating with listeners. We are currently recording Season 3, which launches in May.

Today’s financial tool

The Canadian Real Estate Association’s national price map is your go-to resource for tracking year-over-year price changes for homes in communities across the country.

The money-free zone

Set aside a few minutes in your day to check out this Twitter thread of people’s favourite Far Side cartoon. LOL in the literal sense.

ICYMI

What I’ve been writing about
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