Is Now A Good Time To Buy In The Toronto Real Estate Market? I Dunno. But YOU Do!

August 16th, 2009 Categories: Home Buyers, News Wire

It would be an understatement to say that it’s been a WILD Toronto summer, both weather-wise and in the hot-again real estate market. At long (long!) last, Toronto home buyers found their confidence. And once the decision was made by pre-approved buyers to take their oh-so-low guaranteed interest rates out for a spin, they found that they were not spinning alone.

Oh, Snap!

Return Of The
Toronto Seller’s Market

Upon their return to the market, what did buyers find? Given that the sales-to-inventory ratio now sits at approximately 59% for July 2009 (compared to approximately 34% for April 2009, when I expressed concerns that buyers might have missed their market), we’re most definitely experiencing a shortage of homes available for sale (read: big-time seller’s market). Yes, the real estate shelves are kinda bare. Which means that Toronto buyers are chasing the market this summer.

And believe me. Buyers might not know the sales-to-inventory ratio, but they absolutely know what their real estate market experience has been this summer: few(er) properties to view; multiple offers throughout the city, not just the most sought-after neighbourhoods; the sting of being on the losing end of a string of multiple offers; and the creeping fear that the market will never work for them.

I get it.

In Or Out? Should Toronto
Home Buyers Be In This Market?

It comes as no surprise that chased-out buyers are beginning to question whether they should be buying in today’s real estate market. And if they decide to buy, or to hold off buying, they look to their real estate agents to provide guarantees and assurances for these decisions. Always the quest for guarantees.

But here’s what we all know: There are no real estate market guarantees to be handed out. Ever. And beware the “go-go” agents who make such promises.

And I also know: To have unwavering certainty with respect to major decisions is rare. And envied. No matter the state of the real estate market, good or bad, many buyers will question their timing. They worry that once they close on a property, a strong market will start to slide, or a slumping market will continue to drop. They start to believe they can/should time the market.

And here’s what I further know about that: When the market presents what many buyers hope to see, it often immobilizes them. Don’t believe me? Well, when the market retracted late last year/early this year, the buyers who sat out the market for several years waiting for just such an opportunity continued to sit on the sidelines, waiting for an absolute bottom to form. While sitting on the sidelines, no doubt they met market timers from the 70’s who are holding steady. They’re out there; I’ve met them!

What to do, what to do.

Navigating The
Toronto Real Estate Maze

Is it possible that buyers are asking the wrong questions about today’s real estate market? Often times, I believe they are. The real estate market will go up and down; there’s no way to predict with absolute certainty the peak or the bottom (that’s what hindsight is for); certain neighbourhoods will always be sought-after but that doesn’t guarantee there won’t be price fluctuations; and on and on. Do You Know How To Navigate The Toronto Real Estate Maze?

So what questions should buyers be asking in order to navigate the maze? They should be asking questions about themselves. And based on honest answers, it is possible to make good buying decisions, no matter the market or the economy.

Here are my favourite seven questions, one for each day of the real estate week:

Is Your Job …? Well, I can’t even bring myself to ask if your job is Secure. Because there just aren’t too many of those around these days. A better question is to ask how confident you are that you can consistently bring in the money necessary to pay the mortgage and all other living expenses. Are you the sole source of income, or is this a team effort? Do you have other skills that can be called upon to generate income? Is family available to financially assist if necessary?
Will A Bank Loan You Money? It’s tougher to get a mortgage these days. (As some folks who went in firm on their offers this summer might be finding out very soon.) If you qualify today, you might want to take advantage of that fact as rising interest rates (yes, they have nowhere to go but up) vis-a-vis the possibility of further tightening of global money markets may work against you in the future.
Can You Pay For It? Are you willing to buy well within your financial means? Even if it means buying in a neighbourhood that’s not on your Top 10 List? Even if it means buying less house?
Can You Buy For The Future? If the market dictates you’re staying put for a decade or so, are you prepared to buy the house that will work for your future? Do you have any idea of what that future looks like?
Are You In It For The Long Haul? If you have to sell soon after buying, let’s say within five years, it’s possible you won’t recoup the costs of both buying and selling. Can you identify bona fide reasons why you just might have to move quickly soon after buying?
Can You Handle Market Ups And Downs? A financial loss is always painful. If it happens, how resilient are you? Some folks are great at regrouping and getting on with life. Others, not so much.

And my personal favourite …

Do You Need A Place To Live? Sometimes it’s easy to get caught up in the idea of real estate as a GIC (read: guaranteed always upward price appreciation). But we all need a place to live. And the goal for many people is to own rather than rent. Not a bad goal!

Yeah, that “I Dunno” headline IS a bit misleading!

Toronto buyers and sellers! Are you looking for a Toronto real estate agent who knows the right questions to ask in today’s challenging real estate market? Call Lauren at 416–550–6991, or send me an email.