When To Buy a Home or Condo in Toronto

It’s a sellers market in Toronto isn’t it?  When should I buy?

When is the market going to drop so I can get in at a lower price?

Every week for years now I have talked with numerous buyers and sellers.

Most understand the market and that it generally goes up.

But there are always a few nay sayers . From them I will  consistently here these words….  

 we are in a bubble, or I am going to wait until the price drops.
 When do you think the market will break so I can get in at a lower price?
 
 When I first started in this business the average price in Toronto was in the $60,000 range.
 Yes that does date me doesn’t it. Oh well.

Today the average Toronto home price is $485,000.00
 Eight times higher than when I started. This confirms for me what I always say about City of Toronto Real Estate.   It at least doubles every 8-10 years. Actually more than doubles since I am no where near 80 yet.
 
 So I thought you might find these statistics below with regards to Luxury Condo costs around the world rather interesting.   This information was found in the Financial Times of London and it is the cost per square foot.

The next time you get to thinking that we are in a blip a bubble or the market is about to crash give those numbers some thought.

 The market does cycle and it can drop substantially like back in 2009 when it cycled down for roughly 6 months and created a great buying opportunity for savvy buyers with a 15% drop in values.  It regained that 15% and added 4% more in 2010. Toronto does this consistently.  What I am saying is it recovers and keeps on moving up.

For years now I have seen many of the nay sayers literally get locked out of the marketplace and many of them for good, others ending up buying in areas that they really didn’t intend  to live in such as Newmarket or  Bradford.

It is my humble opinion that you cannot lose money if you  use your noodle and invest wisely in Toronto Real Estate.  Remember that when it comes time to sell, your home is your biggest tax free investment in Canada.  In fact it is the only truly tax free investment you have at this point in time.  When you choose to retire and take money from your RRSP it will be taxed at the top tax rate as your tax deductible expenses will have dropped.

So make it a point to own either the biggest home you can comfortably afford or a home in the most expensive neighbourhood or condo building that you can comfortably afford. The better the neighbourhood the more it will go up.

A 5% increase on a $500,000 home is $25,000.00 but the same 5% on a million $$ home is $50,000. And we do tend to increase 5-6% per year on average.

But I know you still want to know when things will drop in price a little don’t you.  Ah, we are human.

Okay the market is seasonal and in mid summer and the months of December to end of February quite often things are a little less expensive.   No one seems to want to view much real estate when it is 20 below. We are talk 1-3% less expensive generally it is not a 20% drop.  So a small advantage.

Let’s take right now for instance  the end of June. All of a sudden things are starting to slow in some neighbourhoods… not all mind you.  It is a combination of two things. One is we are moving into the summer slump. Folks aren’t viewing homes or Open houses on the weekend because they are out of town at the cottage or on their holidays.

 In the summer in Toronto comes a Laissez-faire attitude to things in general .  Why not we all need a break and so much of our year is cold.  We’ve got to enjoy that nice weather when we can.

 However CMHC did predict in the early part of the year that the housing market would start to slow in the second half of the year.   So it is possible that this factor is kicking in as well.  The truth is we won’t know until about 90 days out.  

We always seem to understand the Toronto market best looking backwards.  We don’t know prices have softened a bit until after it’s done.  It also takes 30-90 days to see a big upswing in activity and price.

What will affect price and cause a levelling off affect is if we started to get a large number of listings on the market.  At the moment  new listings coming on the market is off by more than 27% . At this point there is no sign of an increase anytime soon.

It also takes homeowners who are trying to sell an average of about 90 days before they seem to get the picture that things have changed and they may not get all that they wanted for their home.  That is when we see price adjustments if they are coming.

So if you need to buy a home right now then mid summer will be a good time.  With fewer buyers in town you may be able to negotiate good terms for yourself.  Let me know how I can help you with your purchase or your mortgage.

Aeriol Nicols is a Real Estate and Mortgage Broker in the City of Toronto

You can reach her at (416)443-0300

DLC Edge Financial Licence # M08008390