The Real Estate Market in the GTA just wrapped up another record breaking month in the March with 41% more sales than in March 2020 and saw the average home price increase 21.6% to $1,097,565. For many Canadians, Despite the economic challenges associated with the pandemic, real estate has become the most important place to put their money. The question many are asking..who's buying? and where?
In 2017 It was foreign buyers who were blamed for the over heating real estate market which led to the federal government issuing a special 15% foreign buyers tax that arguably did very little to cool the real estate market at the time. This time the blame lies squarely on domestic buyers as tourism, travel and immigration have come to a halt across Canada. The driving factor for all the rabid buying is the fact that the pandemic has forced people to not only live in their home but also do everything else in their home as well. Live, Work, Play, Educate.... Home has become the most important space we have and its evident that Canadians value home ownership above all other investments. But with these dramatic price increases every year, is home ownership a realistic dream anymore?
For may people (especially millennials between the ages of 25-40) buying a home in Toronto has become harder than ever to afford. The average price of a detached house last month in the 416 was up to a whopping $1.750 million while in the 905 the average detached home was up to $1,320 Million. Yet even with the increasing prices, the number of sales in both the 905 and 416 were through the roof! The demand is there! The supply is not. So where is everyone buying? Where are the opportunities?
For the past year city life is not what it used to be. Restaurants have been closed, offices have asked employees to work from home when possible and social life in the city is very very quiet. As people moved out of the city, investors that owned rental condos that couldn't find tenants went up for sale and savy buyers snapped them up in a great buyers market position. Combined crazy low interest rates, this has made condos some of the best opportunities for end user type buyers trying to get into he market. Will this continue? The current market says that the window of opportunity on the condo market might be closing as inventory starts to dwindle and prices start to increase but definetely worth keeping an eye on if your trying to own some real estate.
Look To The burbs & Beyond!
Some of the biggest increases in sales and home prices in 2021 has been in neighbourhoods outside the city. 905 and 705 saw some of the largest price and sales growth. Moving outside the 416 to find that larger house and yard can potentially save you hundreds and thousands of dollars not to mention the land transfer tax savings.
For example. To purchase a home in South West Etobcioke (Mimico, Alderwood etc)
Purchase Price $1,300,000.00 - Municipal Land Transfer Tax ($22,475) - Provincial Land Transfer Tax ($22,475) Total Tax = 44,950.
If you are to purchase a home in Lakeview Mississauga next door to Mimico Toronto you immediately save $22,475 in land transfer tax and can probably find yourself a larger house and bigger backyard for the same price with essentially no change in commute time. This trend has had a clear impact on housing markets, where large suburban homes have seen the biggest increases in home values over the past year.
Take Advantage Of Low Interest Rates
Rates are the lowest we have seen ever... but should potential homes buyers lock in rates right now or will rates go any lower? Perhaps not lower but they will likely remain this way for the foreseeable future as governments grapple with a pandemic recovery strategy. The reality as has been the case for years in Canada. Those that sit out and wait on the sidelines for homes prices to drop might find themselves waiting a lifetime. Take advantage of the incredibly low borrowing costs and factor that into your purchase. Of course you have to ensure you purchase with in the limits the bank will allow but don't wait it out because you think rates could get lower or are concerned a correction may send rates through the roof. When rates do increase (which they will) expect it to be gradual. Work with your Realtor and Mortgage Broker (Blue Rhino Mortgage Brokers) to get a pre-qualification and the best rate possible.
If now is not the time to buy then dont! Renters are experiencing some of the best lease rates on properties in years. Especially in the condo market. There are lots of options and rates are more negotiable than ever. That may not last but if you can't afford to buy now and need to keep saving thats ok. If there is anything we have learned about the real estate market it is that there are always new opportunities and it changes day by day.
If you have any real estate market questions or would like to know more about some of the latest real estate trends or just need to sell or buy a home! don't hesitate to reach out anytime! Leave comments below!
Posted by Paul Ambler on