No matter which headlines you choose to believe, whether the Toronto real estate market is ‘falling’ or ‘still soaring’, one thing’s for sure; the market isn’t the same as it was just a few months ago.
Back then, home buyers were getting into bidding wars with each other just to get into the market. But the recent news has brought an end to the ‘wars’ in a lot of cases and many buyers seem to be taking more of a ‘wait and see’ approach to the market before jumping in.
Even if there are signs that the prospects for home buyers are improving, it doesn’t mean that you can’t make some mistakes based on the news. While no one can say for sure what will happen to real estate markets in the future, here are just a few of the pitfalls you should watch out for based on the recent trends in the market.
1. Not Doing Your Research
Whenever there’s a change in a real estate market, it becomes even more important than ever to research those changes, both in the overall market and in the local markets and communities that you’re interested in.
Many headlines in the media can be fairly ‘sensational’, just to try to get people to read them. News outlets like it when changes happen in the real estate market because it gives them something new to report. However, they can get carried away with some of their wording and that could affect your understanding of the market and whether or not you should buy.
For example, while the Bank of Canada’s key lending rate when up to .75 percent from .50 percent recently, not all mortgage rates went up from the big banks and mortgage lenders.
If, as many market watchers believe, interest rates will continue to rise, and mortgage rates rise with them, then buyers are well advised to weigh the implications. In particular, if rates go up, it might make home prices go down – but, it will cost more to borrow the money to pay for those homes.
2. Moving to a Community Based on Price Alone
After all the recent news, including the increased Bank of Canada rate, Ontario’s new foreign buyer tax and more homes being on the market, there has been a shift in home prices in most areas. But that doesn’t mean they’ve all gone down.
In fact, many local areas have seen similar double-digit increase as were happening before all the news broke. In Brock Township, near Lake Simcoe, average prices for a detached home increased almost 12% between the first and second quarters of 2017.
For those who have been trying to buy a home for a long time, they can be tempted to choose an area where prices have indeed gone down recently. But to move to an area just because prices are lower than other areas can be a costly mistake. If you don’t have the nearby amenities you want or if you end up with a much longer commute, the benefits of the lower prices can be lost by buying in an area based on price alone.
3. Not Getting Professional Advice
In a market that appears to be changing, it’s more important than ever to be as informed as possible. With so much information available online and elsewhere, it can be tempting to become your own ‘expert’. But just like you’re not advised to make major decisions about your health just because there’s lots of medical information online, you shouldn’t make your own real estate decisions without speaking to realtors who understand the local market that you’re interested in. A home is probably the largest investment you ever make. Why wouldn’t you talk to an expert?
If you’re looking for expert real estate advice for buying a home in York Region, Durham Region, or Toronto, please give us a call at The Stephen Tar Team. We’ve been helping people find the right home for over 35 years.