In the backdrop of a moderating market, buyers need to consider and reconsider their opportunities to make a prudent decision about buying and investing in properties in Toronto. But one wonders whether it is good to buy or sell housing market in Toronto.
Housing Market in Toronto
Since the COVID-19 pandemic, there has been a steady drop in real estate rates in the Toronto housing market. The forecast is for a further drop in rates in Toronto. There was a considerable rise of about 11%, but as the 2023 forecast goes, the prices are set to drop by almost 12% in 2023.Is It A Wise Time To Buy Or Sell In Toronto Right Now? the question here is whether we are entering a buyer’s market. If you consider the ‘sales-to-new-listing’ ratio, which reflects sales and the number of new listings, the yardstick would rate 60% as a sellers’ market and less than 40% as a buyers’ market with reduced demand.
Buyers’ Market vs. Sellers Market
Before we proceed further into the details of the Toronto housing market, and since we have the present status of the Toronto housing market as a buyers’ market, let’s take a look at the definitions of a buyers’ market and a seller’s market. a sellers’ market is when there is a high demand for property available for sale, which shoots up the price of properties. in a buyers’ market, the reverse occurs. A surplus in housing results in more homes available for sale than buyers, such circumstances create a buyers’ market.
Let us summarise these two types of markets as follows:
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Sellers’ Market
- More buyers than available homes
- Higher prices due to an increase in demand
- Properties sell quickly
- Higher negotiation power for the sellers due to multiple offers
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Buyers’ Market
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- Surplus of properties compared with available buyers
- Lower prices due to a surplus of available homes for sale
- Pile-up of unsold properties
- Low growth in prices and even price reduction
- Buyers have more say in purchasing properties and access to negotiations
In short, whether you are buying or selling, it is essential to see the status of the market at that particular time. You need to consider whether you are buying or selling.
Basics of Inflation and Interest
When we talk about inflation, it is an intrinsic part of increasing housing interest rates in the market. It is linked to bank interest rates. Banks tend to keep increasing interest rates, which can heavily impact real estate goals. So, let us have a look at the relationship between inflation and interest. inflation is a kind of index that indicates the rise in prices of commodities, housing, transportation, and so on. It is expressed as a percentage, and we usually consider a 2% interest rate to be a normal rate of inflation.
However, in recent years in Canada, the annual inflation rate has been about 7%, far higher than the expected inflation rate. It can be attributed to several factors, including the economic downturn caused by the COVID-19 pandemic and the war in Ukraine, among others.
Interest Rates Forecast for 2022-23
Before we discuss the current interest rates and forecast of housing interest rates in 2023, let us first look at how interest rates are measured. interest rates are very fluid, even over short periods. They need a particular means of measurement. We usually measure the change in interest through units known as basic points, bps, or bips. Typically, the equivalent of 0.001% forms one basis point. usually, interest rate predictions cover 25 to 50 basis points, and bank economists are optimistic that there will be yet another rate revision before the end of 2022. with all this in mind, you may wonder how this is going to affect buyers and sellers in the Toronto housing market. You need to make certain considerations if you are looking to sell a house in Toronto.
How to Sell a House in Toronto
Buying a home is challenging, but selling a property is also not easy. If you live in Toronto, the Toronto housing market is highly competitive, and you need to have an idea of where you are going. Here are a few tips on what you should do if you have a home to sell:
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Decide on a Realtor
There’s a lot of money involved, so you can’t take any chances. It is always good to enlist professional help. Choose a suitable realtor. You can look it up on the internet. You can go through their testimonials or perhaps get recommendations from family and friends who have first-hand experience selling a property. moreover, realtor social media channels are a good place to find capable realtors. The fact that they are on social media can prove their competency in handling your property dealings.
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Use Legal Counsel
Just as you hired a realtor, you would do well to hire a lawyer. The legal side of the deal needs to be handled by a competent lawyer. So, don’t stop just at a realtor, because there might be loopholes that a lawyer will help you with. So, you might have to spend a bit of extra money, but it will be worthwhile in the long run.
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Season of the Year
It is always good to know the best time of year to sell your property. Although spring is a good time of year, selling your property during other seasons is possible. summer is also a good time to sell a property, especially for showcasing your outdoor space. You can also highlight the interior’s natural lighting through big windows. autumn and winter are seasons in which you might avoid selling your property. During autumn, being the beginning of the school year, people have a hard time. You might not attract many enthusiastic buyers in the winter months, especially during the harsher months.
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Employ A Stager
A stager is a professional who will touch up your property, move around furniture, and generally declutter the space to add to its appeal. You might have to spend anything from $1,500 to $10,000 on a competent stager. But ultimately, your property will look more attractive to prospective buyers without you having to do all the grunt work.
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Home Inspection Prior to Listing
A home buyer will want to have some inspections done on your property. If you can get your property inspected and fixed in advance, you can meet any particular requirements that the prospective home buyer might expect.
Is Investing in Pre-Construction Still Wise?
With pre-construction, it depends on the type of investment you are making. If you buy a property to sell immediately or if you want to live in it, you might end up paying more, and your property isn’t going to appreciate that fast. with a pre-construction investment, there are a few pros, like the fact that you don’t have to pay the entire property value until the final construction is completed. Also, the same goes for the current mortgage interest rates. You can make a good profit by waiting a bit.
Are Toronto Real Estate Prices Decreasing?
With interest rates rising practically every month, more and more people are finding it difficult to buy homes. The result is that competition has increased lately for the number of properties that are available for sale. the situation is even more acute for renters. In the space of a month, the average rent for a single-bedroom house has increased significantly, and the prices continue to soar.
Wrapping Up
Today, buying a home in Toronto isn’t easy, considering the rising housing interest rates. You have to consider many factors that we have mentioned here. If you are a seller, you have the challenge of finding a buyer to match the asking price for your home. if you are looking for a property to buy, it depends on the type of investment you are looking for. If you intend to hold the property for a long time, then spending a bit more on a pre-construction investment makes sense. on the other hand, if your budget is limited, you would have no choice but to go for a resale. Whatever the case, the Toronto housing market is bursting at the seams today, and it’s business as usual for buyers and sellers in the real estate industry.
You May Also Read :
| Insides of Housing Market in Canadian Cities | Housing Market in Canadian Cities |
| Guide To Ottawa Housing Market | Ottawa Housing Market |
| Impact of Housing Innovation Fund | Housing Innovation Fund |
| All About Fair Housing Act | Fair Housing Act |
Frequently Asked Question (FAQs)
Right now is a good time to be a landlord in Toronto. Despite high rents, people are ready to rent. There is a rush of tenants who need to rent homes, and if you have a home to rent, you can be sure to get a tenant within no time.
If you are buying a house, look beyond the essential living area. Look for pool areas, rooftop gardens, and extra space for lounges and dens. It's also a good idea to look for a space that's pet-friendly and differently-abled equipped.
Buyers are having difficulty meeting the asking price for homes with the increased interest rates and corresponding increase in real estate prices.
The inflation rate is measured by a unit called ‘basis points’ also called bips or bps. It is linked to the rise in interest rates. One basis point is equal to 0.001%.
If you don’t have the budget for a pre-construction investment, you are left with the option of buying a resale. While resales can be cheaper than pre-construction, your property isn’t going to appreciate as much as if you had bought pre-construction. What's the best time to be a landlord?
What amenities are important to buy a house?
How are higher rates affecting buyers?
On what basis can the inflation rate be measured?
What is affordable for a longer-term rental or purchase?
