toronto housing market

Your Guide to the Toronto Housing Market

VWB Blog 2 years ago 6

According to the Toronto Regional Real Estate Board, home sales in May 2022 declined by 38.8% when compared to 2021. After the feeding frenzy in 2021, buyers are now more cautious in the wake of rising mortgages and low inventory.

This abrupt change to the flourishing Canadian housing market has real estate agents and sellers alike all in a flurry. Has the great North American real estate housing bubble finally burst, or is this just a temporary hiccup in home sales?

Keep reading for a snapshot of the 2022 Toronto housing market.

To Buy or Not to Buy?

Multiple rate increases have had a marked effect on the Toronto real estate environment. Sales are declining month over month, and prices are starting to decline at last, too.

The long-awaited buyer’s market may be on its way, but it doesn’t look like that’s going to happen any time soon. What is going on, is the beginning of a more balanced scenario.

Real estate agents are already seeing signs of a return to pre-pandemic trends such as prices under asking, the return of conditional offers, and sales offer days with no offers.

Toronto real estate may have flown high during the pandemic, but now it’s plummeting back to earth with average home prices dropping by a whopping 5% per month, and sales following rapidly behind.

The great news for buyers is that inventory levels are soaring, at last, giving them more choices and lessening the urgency to buy right away.

One thing buyers should never forget is that every neighborhood is unique, so averages might not apply equally across the board.

If you’re considering buying a home soon, working with an accomplished Toronto real estate agency like Remax, Royal LePage, or the BREL Team is the best way to anticipate what the market might do next.

What About Selling Your Home?

The above statement applies equally to those who want to sell their homes.

Research what’s going on in your neighborhood and talk to an agent before you make your move. Some neighborhoods are still enjoying increases in sales every month.

Expensive areas, like Rosedale-Moore Park, have barely missed a beat during the GTA slowdown. Affluent buyers who focus on homes in these areas borrow less money to fund their purchases, so rate hikes don’t impact them as much.

Places where prices are already lower, and buyers have less available cash, are the hardest hit by recent rate increases. That doesn’t mean these homes won’t sell, they might just take a little longer to get there.

Overall, things have improved for buyers. Prices are lower, there’s less competition, and sellers aren’t holding out for higher offers anymore. It’s a great time to pick up a fantastic deal on a moderately-priced home.

The Impact of Rising Interest Rates on Home Buyers

The Bank of Canada has promised another rate hike of 0.5% in the middle of the year. While this might not impact your monthly mortgage costs, it’s going to add up over time.

Real estate agents advise prospective buyers to take the plunge now, especially if they have enough saved up for a down payment. Another way to beat the hikes is by shopping around for a fixed-rate mortgage.

These mortgages generally start at a higher rate, but they’re a much better option if you want to avoid the unpredictability of future rate hikes.

For those on the fence about buying or renting, most real estate agents agree that buying is best. Even if you can only afford a tiny place, it’s always better to be paying your own mortgage instead of your landlord’s.

Are Pre-Construction Homes a Good Buy?

Buying a home before it’s built is an expensive way to do things. Firstly, you’ll get no sense of immediate gratification, as you’ll end up paying for something you can’t use.

Secondly, builders base their prices on the home’s value post-construction, not according to the current market. So, there’s no way to benefit from prevailing market fluctuations.

On the bright side, pre-construction homes offer several benefits, like:

  • You can spread your down payment over time
  • You don’t need a mortgage until your home’s completed
  • You can sell before closing
  • You can make a big profit if you sell it on completion

When you opt to buy one of these properties, you’re likely to have more say when it comes to customizations, too.

The Toronto Rental Market

Home prices might be on the cooler side, but the rental market is on fire. There are way more tenants than landlords in Toronto right now, especially when it comes to condos.

If you plan to stay renting your accommodation, for now, you’re in for a rough ride. Prices are increasing and demand is frenetic.

Prospective renters should have the necessary documents ready to go when they start apartment hunting, there’s no time for delays while you get your paperwork in order. If you find an apartment you like at the right price, you must snap it up right away.

However, if you can find a sweet deal on buying an investment condo or apartment in Toronto, you’ll find no shortage of tenants prepared to pay top prices.

Navigating the Toronto Housing Market

As the Toronto housing market settles, we are sure to see inventory levels return to normal. If you’re looking forward to buying a home in Toronto, there’s a chance a buyer’s market may emerge soon.

On the other hand, you might miss out on your dream home if you wait. Working with an experienced, licensed real estate agent is the best way to ensure you get the home you want at a price you can afford.

Would you like to keep your finger on the pulse of real estate in Toronto? Bookmark our site and check back regularly for updates.

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