Is the real estate market about to turn upside down? The past few years have seen one of the busiest, most competitive seller’s markets on record. However, recent increases to the interest rates and new legislation might change everything. Homeowners are debating whether now is the time to sell or if they should hold on a little longer to see if prices continue to rise.
Buyers are watching, eager to find out if homes will become more affordable and if more listings will become available. Whenever the market changes, there are always some people who stand to benefit more than others.
Who Benefits Most in the Current Market?
The recent shift is excellent news for one particular group of people: The downsizers.
If you have considered downsizing, the conditions are better than they have been in years.
Buying a house in Toronto is challenging, but we can help! Here are some tips you might find useful:
- How To Buy A House in Toronto With Our Boutique Approach
- Buying a Home in Toronto’s Tight Market
- Changes to the Stress Test: What Buyers Should Know
The Biggest Problem Alleviated
Up until recently, many homeowners have delayed their plans to downsize because of one very serious problem. Once you sell your house, where can you go? Selling is the easy part, but buying a new home is a whole different story.
Commanding top dollar doesn’t help much when property prices soar after your home has already sold. The inventory of available properties has been at an all-time low, and everyone has heard horror stories of people getting priced out of the market.
This severe housing shortage has held many Toronto homeowners back for a long time.
What has changed recently?
Two events seem to have caused a shift in the marketplace. Recently, the Bank of Canada increased the interest rates. The last hike almost doubled the current rate. Higher interest rates make it harder to qualify for financing.
Unfortunately, many hopeful first-time buyers found themselves forced out of the market. With the more stringent stress test, fewer people can get into the market without the power of equity behind them. However, as a current homeowner, you have more equity and more buying power than almost anyone else.
With so many first-time buyers out of the market now, you now face less competition when searching for your new home.
How Will New Legislation Impact the Market?
It isn’t just interest rates affecting the market. Both the provincial and federal governments are under pressure to bring balance to the out-of-control situation and help make homes more affordable. Recently, Ontario legislation has raised the foreign buyer tax to 20%.
It is uncertain whether this will cause housing prices to drop because local demand is still high. However, it makes buying a property in Canada less profitable for foreign investors, and may result in more available listings. In addition, Federal legislation is in the works that may ban foreign buyers altogether while the nation invests millions of dollars into new construction to address the housing shortage.
The result?
We have already noticed a shift in the marketplace.
Housing Prices Have Not Dropped – Yet
The soaring increases in prices seem to have slowed down, even in the GTA. Experts are debating wildly over whether the bubble will burst or if prices will merely stabilize. For now, property values remain at all-time highs.
There Are More Properties Available
Last year, buyers geared up for a busy spring market only to find very few listings available. This spring, there are far more houses for buyers to choose from. We don’t know if this trend will continue or if the listings will dry up once the busy season is over. However, it is a better time to buy than it has been for several years.
Some Listings Don’t Sell
Listing your house used to mean an almost guaranteed sale. And it is still rare for a property not to sell, especially in the GTA. However, it is no longer a sure thing, and sellers are becoming aware of the fact that they should prepare their home before putting it on the market.
Are you wondering about what you can do to prepare your home for sale? Here are some ideas you can consider:
- Tips To Make Your Home Appeal to Younger Buyers
- How To Prepare Your Home When You Have No Time
- 3 Tips For Selling a Luxury Home in the Current Market
We Are Starting to See Conditional Offers
Conditional offers used to be standard procedure, but many buyers have dropped all contingencies to compete with other hopefuls. Over the last month or so, we have started to see certain conditions coming back, including conditional on sale and home inspections.
Why the Timing is Great for Downsizers
As a seller, there is no worse feeling than to find out you could have received $100,000 more if you had waited a month. This was common over the last two years, and is just one more reason many homeowners didn’t sell even though they were ready for a change. The next interest rate hike might start to affect the market. However, right now, property values are still high. You will still command a very high price and make a significant return on your investment.
And with more listings available, you have options for your next move.
- You can choose to buy a smaller house in the same neighbourhood
- You might decide to buy just outside the city
- You can purchase a condo in downtown Toronto or by the waterfront
- You can stay close to your family and perhaps build a secondary suite
Are you wondering if the time is right for you to downsize? Contact us today, and we can discuss your best options.