By Aleksandra Oleksak, The Real Estate Chick
Welcome to the moving train that is the Toronto real estate market! It is always easy to get on when the train is at a standstill, but naturally, much harder when it is already moving – and fast! In many ways, the Toronto real estate market is synonymous to the moving train. Buyers who contemplated buying 3 years ago, but waited on the sidelines, are now regretting it. Prices have gone up quite significantly since that time. If you are waiting for the train to slow down – don’t. Low interest rates, land (a non-renewable resource), consistent immigration and responsible fiscal policies will continue to drive responsible demand. Despite potential nominal adjustments, the year-to-year home prices are seeing and will continue to see an upward trend. So let’s recap: in today’s market we can be confident that…
More Homes Are Just Not Being Built
New homes are not being built in Toronto, especially in the downtown core. With historically low inventory levels, prices are rising for the existing ones already out there. TD Bank was recently quoted saying: “For every detached house that gets built, there are three new condos built”. Therefore, if you are waiting for that housing crash to come and lower prices, it is just not going to happen. It is basic economics: supply vs. demand.
Mortgage Rates ARE Low
I know we have been hearing this for a few years now, but mortgage rates ARE low, and definitely a driving force for buyer demand and increasing home prices. Renters are finding merit in home ownership when rental prices are almost at par with monthly mortgage payments. Some people are choosing to live at home longer and saving up hefty down payments. Five year fixed rates are almost as attractive as variable mortgages for the more prudent buyer, who is looking for predictability with their payments. Even when mortgage rates eventually increase, they will still be at a historically low level and buyers who fixed their rate will be more then happy that they did.
The Train Doesn’t Stop
Home prices are on the rise and they are not stopping anytime soon. If anything, they are speeding up, just like a fast moving train. With the average price of a home in Toronto being $666,724 during the first 14 days of April, compared to the average price just a few short months ago in January of $517,219. You can see it is just getting more dificult to get on that train. The warmer weather may bring some more inventory onto the market, but at the end of the day we can only buy what has already been built many years ago. Bottom line, if you wait any longer you might just get priced out of the Toronto real estate market.
These points are here to give some cold hard facts about our market. In the end you always have to ask yourself whether it is the right time to buy for you! If you sit on the sidelines making your decision for too long, you may miss a few trains in between and wished you had jumped on sooner or you may not jump at all. Only time will tell.
Aleksandra Oleksak is Her City Lifestyle’s “Real Estate Chick,” and a Toronto real estate professional with Sage Real Estate. As @RealtyQueenTO, her real estate blog has been named one of the top 50 real estate blogs in Canada.