You’ve likely heard by now, that the Toronto real estate market is shifting. And by shifting, I mean: more listings, fewer sales, and even some lower prices than we would have seen just a few short months ago. The Toronto Real Estate Board May 2017 statistics show:
- 49% increase in new listings in Toronto
- 20% decrease in sales
- 4.6% decrease in prices
While some decrease in activity is typical at this time of year, there’s no doubt: we aren’t in Kansas anymore.
So is it a good time to buy in Toronto?
Well, that depends.
If you’re a frustrated winter Buyer…you have more options than ever now, and in all likelihood, you won’t have to compete in a bidding war (or at least not a fierce one). Get out there and buy a better house than you could have bought in February or get yourself into a better neighbourhood. There are oodles of great houses out there right now that have been on the market for a few weeks.
If you’re a first-time Buyer…this is your time. Interest rates are still crazy low, you’ve got plenty of options to choose from and the whole process will be much less intimidating than it would have been a few months ago. If the bidding war madness returns in a few months, you’ll be kicking yourself for having missed this golden opportunity. Also, if you’re currently renting…remember: you ARE paying a mortgage right now – it’s just someone else’s. [Related: Rent vs. Buy]
If you’re a move-up Buyer (in other words, you’re looking to sell your current home and move up to a bigger, more expensive one)…declining prices and activity are actually good for you! I call it the Market Differential, and it works like this: You own a $650K condo and are looking to move into a $1.2 million house. If prices are down 5%, that means you’ll get $32,500 less for your condo…but you’ll pay $60,000 less for your house. That’s a pretty sweet $27,500 bonus! And don’t forget that the condo market and the housing market are different – right now, most of the softness is being seen in the house market. So it’s totally possible that you’ll still get $650K for your condo…and just save $60K on your house.
If you’re an investor…well, you’ll need to get past all the new BS Tenant Rights introduced by Wynne, but the rental market continues to be crazy hot, rents are high, and there’s an opportunity right now to score some deals, which will improve your ROI greatly. Depending on your goals and how long you plan to hold the property, this could be prime time for you.
If you’re moving for lifestyle reasons (e.g., marriage, divorce, a growing family, retirement, etc.): remember why you’re moving. Forget about ‘timing the market’ – none of us can do that effectively anyway. Do what’s right for you and your life right now…and buy and sell smartly.
If you’re a house flipper….this might be time to take a pause. Buying and selling in a short period is risky in a shifting market. Can you hold the property if prices continue to go down for the next six months and you can’t break even? What’s your Plan B?
If you’re looking to buy pre-construction…well this is where it gets interesting. While most of the changes in the Fair Housing Plan should have dampened the pre-construction market more than anything, we’ve actually seen an increase in pre-con activity. Most of the projects that have launched in the last few weeks have sold out in a day and at some crazy prices – much much higher than what Buyers could buy in the resale market.
But what if prices go down further?
Well, that could happen. So take the time to evaluate your personal and financial goals, how long you expect to be in the property and all the ‘what if’ scenarios you can think of. An experienced lender and REALTOR can help sort out your options.
But what if they don’t?
When the foreign buyer tax was introduced in Vancouver, activity, and prices started to rebound within 6-9 months. In the past, mortgage and rule changes in Toronto resulted in a slowdown in activity for 4-6 weeks…and then the craziness returned. What if you miss the opportunity that’s before you right now? What if what we’re seeing is just Buyer over-reaction that will sort itself out?
But the media’s been saying the market is going to crash….
Yes, yes they have been predicting a crash – for the past 10 years! And in those 10 years, the average Toronto homeowner benefitted from a 112% increase in value….or over $475,000 on an average $900,000 home. Tax-free. That’s a good chunk of $$$$.
Not sure what to do? Get in touch and we’ll help you decide!