When is a good time to buy? This is a question that I am asked regularly from buyers. The “right” time to buy is when you are ready. In our current real estate market there are ebbs and flows from month to month, or sometimes from week to week. When it comes to preparing yourself to purchase a home there are some variables to consider:
1. Financial position
• You need to determine your budget, and what is affordable for you based on your lifestyle.
2. Interest Rates
• Determine the rate, and get pre -approved so your rate gets locked in just in case there is a rate increase during your home search period. Typically, you can get a rate guarantee for up to 120 days.
3. Market conditions
• What is happening with the local market you want to consider purchasing in?
• What are the inventory levels for the type of home you are considering?
• What are the average days on market it takes for a house to sell?
• Are prices going up or down?
4. Personal/Family requirements
• What size of home do you require?
• Are school districts important to you? Did you know that can influence your resale value, even if you don’t have kids?
• What is your lifestyle? What amenities are important to you in the community?
• What about commuting? Do you need to be close to public transit? Or do you prefer driving? Commuting around Toronto and the surrounding area is always a hot button topic. You need to weigh house size, space, and lot against proximity to work. Our busy lives are leaving less and less time for family. Commuting is one of the greatest challenges facing people in the GTA.
5. Hiring the right Realtor
• There are 60,000 plus agents working in the GTA, find one that works well with you. You want someone who is knowledgeable, professional, and transparent and responsive. Make sure you choose someone with a proven track record and references, and someone who knows the neighbourhoods you are considering.
Is it the right time to buy if you are a first-time home buyer?
If you are a first-time buyer, you might feel as though you missed the boat on a purchase because of price escalation concerns. Now is the time to reconsider and jump in. Rate increases may help your position, if you have the means to put down a down payment and qualify at the current interest rates. Some buyers have been pushed out of the real estate market by tougher lending rules meaning there is more opportunity for you. As long as you’ve continued to save, or are borrowing from a RRSP as a first-time buyer, the slight rate increase won’t change your payment significantly, but it might be enough to push other buyers out of the market that were already at the top of their price threshold.
Prices in some segments have stabilized, and even dipped. An example is the Toronto condo market; on average, prices are down 2.1% from September 2018 to October 2018 even though supply is low. The condo segment has been the strongest market sector in 2018, so this slight decrease in price for condos might be a sign that prices are about to stabilize across the board, which makes it a great time to purchase.
What about move-up buyers?
With interest rate increases being forecasted, it is likely we are going to be experiencing changes in the marketplace. This doesn’t necessarily mean doom and gloom, it just means times are changing and we’re likely going to be in a more balanced or even slower market. With change, comes opportunity. The gap has been closing between semi-detached and detached houses. Semi’s have gained an average price increase of 8.1%, where detached homes have only increased by 1.4%.
Understanding market conditions is a very important component when purchasing a property. This is where an experienced Realtor will have great insight as a resource to you. Having market intelligence on price increase/decrease, sales volumes, months of inventory, days on market for sales, year over year listing and sales ratios all factor into what’s actually happening in the market, and more importantly, how it affects you, and your decision making. This is where you need to sit down with your agent to decipher all the numbers. Yes, the fun part is getting out and viewing properties and neighbourhoods, but doing all of the research and homework first will make you a more prudent buyer. This will allow the home buying process to be stress free and seamless.
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