Life during the pandemic hasn’t been a lot of fun, but it has allowed many Canadians to funnel the dollars they would have otherwise spent on travel, entertainment and big weddings into savings. The result? Many first time home buyers have been able to save bigger down payments faster, allowing them to accelerate their home buying timeline. And with work-from-home jobs becoming more plentiful – and sometimes, permanent – geographical needs have changed too, allowing many aspiring Toronto Buyers to look to the GTA or beyond for their first home purchase.
Unfortunately, this all coincides with a red-hot real estate market throughout Ontario.
If you’re a first-time Buyer in 2021, here’s what you need to know:
- Get pre-approved for a mortgage, stat. Interest rates are at all-time lows and your buying power has increased significantly as a result. Getting pre-approved means you’re locked into those great rates (usually for 90 days) and are protected if rates go up – but aren’t locked in if rates go down. [Related: Interest Rates During the Pandemic]
- Speed matters. When it comes to house hunting, don’t delay seeing something you love – houses with bidding war dates are often selling before the ‘offer night’ in bully offers – and condos with no offer dates are often sold in hours or days. There are plenty of virtual ways to tour a house and safe, in-person showings are still happening. On Superbowl Sunday, we watched a condo come on the market at 3 PM – it had 6 offers that evening. Make your house search a priority and work with an agent or real estate team with a flexible schedule. [Related: Bully Offers]
- Be ready for a bidding war. When there are more buyers than there are sellers, it’s not unusual for a property to receive multiple bids. While bidding wars have been the norm in Toronto for a long time, we’re seeing them across the GTA and beyond. If you find yourself in a bidding war, you’ll likely need to make a ‘firm offer’ – meaning your offer won’t have a financing condition or home inspection condition. Be prepared to perform all the usual due diligence before the offer: have your financing secured, get the home inspection or if you’re buying a condo, have the status certificate reviewed by a lawyer. You can read all our best bidding war advice here: How to Win a Bidding War.
- Make sure you can access your deposit. When you buy a home in Ontario, you need to provide a deposit within 24 hours of your offer being accepted. In Toronto, the deposit is usually equal to 5% of the purchase price. If your deposit money is in a virtual bank or RRSP, transfer it to an account you can instantly access. Note: if you’re in a bidding war, you may need to provide the deposit with your offer and won’t even have 24 hours to sort it out.
- Accept that new benchmark prices are being set every day and that often means paying more for a home today than you would have paid just a few weeks ago. That’s not a reason to get angry or panic – but use that intel to make smart offers that will get you the house you want. There’s nothing worse than losing a bidding war for a condo by a few thousand dollars and seeing the same kind of unit come up for sale a few weeks later, with a price tag that’s $20,000 more.
- Expect lots of COVID safety protocols. The process of buying a home has changed a lot during COVID, so expect Zoom buyer consultations, virtual showings, masks and distancing and electronic paperwork. We’re finding most people prefer the new process – you can read more about what to expect during COVID here.
- Be ready for the closing costs (you can read more about closing costs here) – and make sure you’re familiar with all the first-time buyer incentive programs.
- If it’s the right time for you to buy a home, don’t wait in the hopes that prices may come down. This is a risky strategy that can cost you thousands of dollars – and not just because of increasing prices. The last thing any first-time buyer wants is to get priced out of the market. (we blogged about the true cost of waiting to buy here).
- Work with a local REALTOR. If you’re thinking about buying outside of the city, make sure you’re connected with an agent who understands the local market, prices and housing stock. Just like a rural agent won’t understand the Toronto condo market, your Toronto agent isn’t the best person to help you buy a rural house with a septic tank or lakefront property.
- Be informed. We’re hosting a Virtual First Time Buyer Workshop on February 24, 2021 – you can register for it here!
Buying your first home is exciting – but it’s stressful too. Be ready. Be smart. Choose your agent wisely.
Read More: First Time Buyer Guide