The best time to buy a house in Toronto is when you need a new home. Purchasing a primary residence is a financial and personal decision. The personal often outweighs the financial considerations, so if you see a house you like, in your budget, and works for your family’s long-term goals, that is a good sign that you should buy that house. Affordability in Toronto has consistently gotten more challenging. Prices or interest rates continue to rise. Either way, your monthly bills will increase. Unless prices and interest rates start going down simultaneously, waiting for a change in the market will not save you any money. Instead, regardless if prices or interest rates are trending up, “waiting the market out” usually costs you more money. Even in a buyer’s market, listings in Toronto are scarce, so the chance of you finding a house you love when prices and interest rates are down is unlikely.
Thinking about buying a home in West Toronto? Consider these other posts from our blog to build up your buying knowledge.
That said, two market conditions make a good market for buyers. The first is when there are lots of listings. This spreads out the buyer pool and reduces competition, which, in theory, reduces prices. The second is when prices are trending downward. This is considered a market softening, an elusive concept for many Torontonians. However, rising interest rates usually cause lowered prices because the two are like teeter-totters.
So, if you need a new house when the prices and competition are at their highest, don’t despair. You should still buy a home if you can afford it and love it. If you stay in it for over five years and sell at the right moment, there’s a good chance you’ll make money, no matter what else is happening in the market. We’re hearing from many stressed people who bought in January and February 2022 because they bought at the “peak” of the market. But, if they purchased a home that they like and they intend to stay there for several years, they’ll be just fine (pro-tip: if this is you and you’re still in a variable rate mortgage, talk to your mortgage broker asap to see how you can mitigate your now-high payments).
When the economy shifts, so can real estate. Should you buy a home during a recession? Click here to read our blog topic on the post.
If, on the other hand, you’re in luck and you happen to need a new house at the moment of either lots of listings or a market softening, congratulations. The real estate gods are smiling at you. But you need an excellent strategy to ensure you aren’t wasting this opportunity. Here’s how to take advantage of this situation
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Use as much cash as you can. The best way to take advantage of low prices and avoid high-interest rates is to buy with money. Obviously, this isn’t possible for everyone. But don’t hold too much of your cash back. Try to use as much as possible on your downpayment, so you don’t need to borrow as much.
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Expect to negotiate: You can go back and forth with the seller to see if you can get the house for less than the listed price.
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Use conditions: A softening market is a great time to take advantage of financing and home inspection conditions. Especially if interest rates are rising and banks’ lending rules are tightening up, you must ensure that your financing will be approved.
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Be realistic: A softening market rarely means a wholesale market. You will miss your chance entirely if you consistently lowball your offers.
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Shop around your mortgage: find a mortgage broker who can give you lots of options with your mortgage. You want a broker who can work to get you the most affordable package.
The best time to buy a house in Toronto is when you need a new place. In other words, while there are better conditions than others for buyers, there’s no wrong time to buy a house, especially if you plan on living in it.
Have questions about buying or selling? We have answers! Reach out to the Kim Kehoe team.
