So, you want to buy a house or condo in today’s sellers’ market? With interest rates at record lows, and set to stay low for the next few years, the number of active buyers is going to stay high for some time. In fact, I believe that a number of factors are setting the stage for an extremely busy real estate market in Toronto for 2012 and 2013: ongoing, if modest, economic growth (and yes, blips will appear); a slowly improving job market; those low rates; and – perhaps most importantly – receding fears of a major price correction.
Regular readers will know that I have always believed in the Toronto market. It is completely different from other markets in Canada, so declines in the ‘national average price’ (whatever that is) mean next to nothing here. Even during the recession, I urged buyers to act quickly to take advantage of the very brief lull. Since the recovery, I have argued against the ‘bubble theory’. Now, BMO has issued a report re-framing their minor concerns as a ‘balloon’ that may deflate slightly over time. While caution is always warranted, I think that ‘head for the hills’ fear is behind us. That is going to draw more buyers into the market.
For you first-time buyers (and those of you who haven’t done this in a while), there’s lots that you need to know – not just about the market, but about the process. I provide all of my buyers with a comprehensive, custom Home Buyer Guide. We’re not talking rocket science here, but almost every purchase or sale has something unique about it. Knowing the basics will help you to prepare yourself for your experience. The following is by no means a comprehensive list; rather, it’s sort of a “Top 5″ – or better yet, a “First 5″ things you should know (updated from a previous post):
· Be an educated Buyer. Learn as much as you can about the market before you buy. I’m happy to take out all of my clients to start looking at houses early on in the process. If you seriously want to buy, it’s never too soon to start getting educated about market conditions, what your money will get you, neighbourhood characteristics, etc. On that note, be honest and open with your Realtor®! I work for you and can best help you if I have a good understanding of your needs. Once I know what you are looking for, my job is to be the objective guide in the process to ensure your needs and interests are met and protected. (I.e. I’ll be better able to show you houses that interest you.)
· Get pre-approved for your mortgage as soon as possible. This helps you to determine your budget, and locks in today’s best rate for you. I will help you connect with a mortgage professional if necessary.
· Act quickly! If you want to see a listing call me right away and book an appointment. Most well-marketed houses and condos will sell within a week or two, so there most often won’t be time to dilly-dally.
· Accept that it’s a ‘seller’s market’ and act accordingly. That means be prepared to make an offer on Offer Day (financing lined up, home inspection report in hand). Chances are there will be competition on most well priced, well prepared listings this year. We’ll look at comparable sales and determine a reasonable valuation for the house/condo. The rest is left somewhat to ‘fate’, and will depend upon your desires vis-a-vis other bidders, but if you do your best you have a decent chance of success. (This is a complicated topic, and we will spend plenty of time talking about it throughout your search.)
· Plan to stay in your home a minimum of two years to ‘break even’, five years to build a decent amount of equity. This may require sitting down with a partner to plot out a viable plan – just to make sure that the move makes sense. The bottom line is that you shouldn’t expect to make money in less than two years.
There you have it: five basic principles to get you started on your new home search. Be sure to re-visit my blog for more tips – and please do contact me if you want more help! Call me any time.
Toronto Real Estate Market Continues Strong Growth
February 15, 2012 by Simon
TREB released its monthly Market Watch for January 2012 last week. It came as no surprise that the Toronto real estate market was once again up in price (by almost 9% on average). It was also up in volume (the number of sales was up 8.8%), a reflection of a little boost in the number of new listings and continued strong demand by buyers.
The biggest challenge we have faced in the Toronto market post-recession has been a lack of listings. Rising prices were supposed to encourage more homeowners to put their properties on the market, but we haven’t seen that, yet. So, any increase in the number of new listings is good news. However, as I reported in December, the demand is still greater than the supply. Thus, although there were more new listings posted in January 2012 than in January 2011, the total number of listings available went down. Also, reflecting the torrid pace set by buyers, the average number of days on market declined from 36 to 32. So, in addition to selling for more money than last year, homes are also selling faster (which makes sense).
So, why is the media reporting today that the “Canadian real estate market’ (whatever that means) is “cooling“? Maybe it has to do with the weighting of cities like Vancouver, but it’s certainly not a reflection of what is happening in Toronto. It does seem to have something to do with CREA’s comparison of January 2012 to December 2011 (for a month-over-month analysis). Go to their news page for more info. You’ll see this handy quote: “Actual (not seasonally adjusted) activity came in 4.0% above levels in January, 2011 and stood even with the 5 and 10 year averages for January sales.” To me, that is a more relevant comment – up, not down; normal, not abnormal.
The Toronto real estate market moves in cycles within each year: busy spring, slower summer, busy fall, slower winter. These ups-and-downs should not be confused with over-all, year-over-year trends. The cycle is a reflection of peoples’ lives – for example, of wanting to buy or sell in time to close at the beginning or end of the school year, or not wanting to be on the market over the Christmas-New Year holidays. Month-to-month variations occur, but are rather well understood.
This morning I attended a weekly meeting with a group of RE/MAX Hallmark agents. We all have buyers eagerly looking for homes to buy, which is a sign of a strong market for this year. However, we are also wary of prices spiking too much, which could negatively affect buyers’ ability to close on purchases. The market is ‘hot’, and will stay that way for the foreseeable future. That said, it’s important that you not get caught up in the moment. I’m not worried about a ‘bubble’. (I thought that we were past all of that mis-placed speculation!) I’m more concerned about the immediate impact on buyers, and the market, of lenders refusing to validate some of the prices we are seeing (when they appraise it for a mortgage). Know your valuations (I provide the background on that for each house on which my buyers want to offer) and the market; also, know your budget, and work within the boundaries. It may mean looking in a different neighbourhood, so keep an open mind! ;)
Contact me for a copy of the latest Market Watch report from the Toronto Real Estate Board. It included numerous breakdowns – by location, type, size, etc.
Posted in In the media, Market Commentary | Tagged Market Commentary, RE/MAX Hallmark, Simon Milberry, Toronto, Toronto Real Estate Market | Leave a Comment »