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t’s OK if you’re confused about what to do in Toronto’s real estate market right now. It’s been a weird 18 months: from crazy price increases in the spring of 2017 to a dramatic market slowdown after the Ontario Fair Housing Act was introduced to a nice, gradual return to normalcy in most places. Layer in a new Ontario Ford majority government, an upcoming election in Toronto (notwithstanding, lol) and daily chaos south of the border and it’s no wonder you don’t know what to do. Should you buy now? Wait? Sell now? Sell later? Here are 10 safe real estate moves to make right now.
1. Get pre-approved before rates go up again.
The Bank of Canada has signalled their intention to raise the interest rates again, possibly as soon as October 2018. That’ll be the third increase this year and impacts Buyer purchasing power. If buying a property in the next three months is even remotely in your thoughts, get pre-approved for a mortgage NOW.
Pro tip: we work with some of the best lenders in the city and can hook you up!
2. If you NEED to sell, remember: we know what we know right now, and nobody can predict the future.
Do you need to sell or do you want to sell? While it’s fun to read predictions about what’s going to happen in the real estate market, the reality is that the best time to sell, if you NEED to sell, is when you know the exact conditions you’ll be selling in – in other words, RIGHT NOW. Trump, Ford, NAFTA and a million other world disasters could change our market at any time-it’s risky to just cross your fingers and hope for the best. If you WANT to sell (vs NEED), that’s a different decision.
3. Consider buying your second house first if you can afford it.
While the Toronto housing market has had a solid 12 months (detached houses prices are up 4.9%, and condo prices are up 8.3%), the overall correction means that the pace of growth is slower than what we’ve been used to, and prices lower than what we would have predicted a few years ago. While most people buy a starter home with a lot of compromises (location, size and finishes) and upgrade to their dream home later, if you can afford it, consider buying your second house first. You’ll save land transfer taxes, commissions and a lot of moving stress. [Related: Buy Your Second House First]
4. You can never go wrong by making a lifestyle move.
Forget about the ‘real estate market’ for a second; this is real life. Want to shorten your commute or get in a better school district? Live closer to your inlaws who’ve offered to babysit? Move to a condo and rid your life of unsexy house issues and gardening ? Do it. Life is short. Enjoy it.
5. Sell a condo, buy a house.
Toronto is a tale of 2 markets these days and if you’re one of the lucky homeowners who own a condo in central Toronto (where prices have appreciated over 10% from August 2017 to August 2018) and are looking to move to a neighbourhood that has seen slower price appreciation (for example, the E1 district (Leslieville area) that saw less than 1% price appreciation or the E2 district (Beaches) that saw a 6% increase), do it. You’ll be on the good side of both markets and that rarely happens.
6. Location, location, location.
If you’re worried about buying a home and the market stalling or crashing, remember the #1 rule in real estate: location, location, location. The more prime your location, the safer you’ll be if the market slows down. Prime streets and prime neighbourhoods are always popular.
7. Life transition moves.
If you’re looking to buy or sell because of a life transition – marriage, babies, divorce, illness, death, a move to a different city – there is no ‘good time to buy’ and there is no ‘good time to sell’. Life happens, and we deal. Bringing stress and grief into your life in exchange for a hope that you can time the market usually isn’t worth it. If you can afford it, don’t start your marriage off in a 400 sqft condo or cram your fourth baby into your two-bedroom condo.
8. Condos, condos, condos.
It’s been a great year for the condo market, and while prices have increased quite a bit, they’re still a more affordable option than buying a house. With 11 new construction condo projects cancelled this year, the influx of new condos has been reduced, and we’re still experiencing a crazy-hot rental market-the future of condos in Toronto looks good. And if you’re renting a condo and paying someone else’s mortgage? It might be time to pay your own.
9. Stay within your budget (and prep yourself for higher interest rates).
It’s never a smart move to overextend yourself financially, so stay within your budget. Recognize that that might mean making compromises you didn’t intend to make – different neighbourhoods, a smaller home, less stylish finishes – but as interest rates increase over the next few years, you’ll be glad you didn’t spend more than you could afford. Bonus: you’ll own a property and have a life too!
10. Buy a house with an income apartment.
The rental market has a ridiculously low vacancy rate and bidding wars for rentals are commonplace. If you can find a house that suits your needs AND has an income apartment? Bonus! The tenant can help pay down your mortgage, and that just might enable you to buy. [Related: Is that basement apartment legal?]
Thinking of buying or selling this fall? We’d be happy to help!
