What buyers need to know in the changing housing market

Adel Denani, founder and director of Denani Group Real Estate Advisors in Coquitlam, British Columbia, says higher interest rates have stabilized the market, but it’s still a sellers’ market.Jennifer Osbourne/The Globe and Mail

Even as Canada’s housing market is showing signs of cooling from the sweltering hot levels it reached earlier this year, it’s still very difficult for buyers to get a good deal. But experts say there are ways for potential buyers to make gains.

“My partner and I got a great deal off buying an apartment in Toronto through an assignment sale,” says Jonathan Tosti, a 28-year-old manager at a digital media company. In an assignment sale, the buyer buys the property from a previous buyer who purchased the right to own the apartment before it was built.

In many cases, the purchaser of the sale will pay more than the original purchaser. “But with this pandemic, some people got in their heads and after they put their money in they wanted to get it out,” explains Mr Tosti.

“We worked with an agent who was an expert in task sales and were able to get our condo at a lower price than the original list price,” he says.

The housing market has been changing with rising interest rates. “It’s still very much a sellers’ market, but it’s stabilizing,” says Adel Dinani, founder and director of Dinani Group Real Estate Advisors in Coquitlam, British Columbia.

Economists and real estate analysts expect a drop of up to 20 percent from peak prices reached earlier in 2022 for homes and apartments across Canada, with lower demand in suburbs of hotter regions like Vancouver and Toronto.

For example, the number of multiple offers on real estate is decreasing, says Mr. Denani. “Now, there’s a bidding war on maybe 20 percent of the property, whereas before that it was more common.”

Another good news for buyers is that more homes now take weeks to sell, compared to the days and even hours when the markets were very hot, he adds.

Elke Rubach, founder and CEO of financial advisors Rubach Wealth, says buyers – especially younger buyers – will benefit from being calm, creative, and by having realistic expectations when shopping at home.

“One of the first things to remember is that ownership comes with responsibility. Most of us would like to own something, but you have to understand at any cost. You don’t want to put pressure on yourself,” Ms. Robach says.

The Bank of Canada raised its key lending rate to 1.5 per cent on June 1 and has not ruled out further increases this year. This appears to be slowing and even reflecting previous price hikes – the national home price index fell 0.8 percent from April to May, on top of a 1.1 percent drop from March to April – and national home sales fell 8.6 percent year on year. monthly basis.

This discouragement doesn’t quite mean a buyers’ market, and potential buyers still need to be careful, warns Ms. Robach.

“The first thing you should do is plan financially, even before you even look to buy. Buyers should realize, for example, that even now to buy and carry a home in Toronto, you should have $200,000 in income a year — not earning much from People that, she says.

In terms of creativity, Ms. Robach suggests looking at different ways to come up with down payment and financing. There is a ‘mom and dad’s bank’ [borrowing from parents] For example, people also meet up with friends and buy real estate,” she explains.

Buyers who buy with friends need to be meticulous about the agreements they make with joint buyers, as she says, “You might not want to own the property together forever.”

Deb Vukelich, a real estate broker with Royal LePage in Niagara Falls, Ontario. She advises buyers to see what government funding programs are being offered, such as the First Home Savings Account announced in the April federal budget.

“Account holders will be able to contribute up to $8,000 annually, with a maximum of $40,000,” she says. The money can be withdrawn tax-free and applied to the purchase, but only if it is for your first home purchase.

First-time buyers can also withdraw up to $35,000 from registered retirement savings plans if they buy a home, but that money must be returned to the RRSP within 15 years to avoid being taxed.

There are also short-term tactical steps buyers can take as they embark on their home-buying quest, says Thomas Eltoft, owner of Niagara-on-the-Lake Realty in Niagara-on-the-Lake, Ont..

“You have to be prepared and well educated about the particular housing market that you are entering,” he says. For example, the Niagara region lies within the Golden Horseshoe that stretches across Toronto east to Bowmanville, Ont. But in this region, the markets in different neighborhoods can vary widely.

It pays to find an agent who focuses their business in whatever neighborhood you choose, he advises.

Mr. Eltoft agrees with Ms. Rubach that it is most important for buyers to have upfront financing. “You have to understand what you can tolerate in the best and worst case scenarios,” he says.

When the housing market was hotter earlier this year, buyers were looking for quick opportunities such as buying a home, pre-construction apartment or defaulted condo at a bargain price. Mr. Eltoft says the market is calmer now, but buyers still need to be able to act quickly when they decide they are ready to buy.

Interestingly, he suggests looking for a home on a sunny day where you might prefer to be somewhere else.

“When the weather is great or it’s a long weekend, more people want to go to the beach and fewer people are looking. On a cold or rainy day, I end up with more shows,” he says.

“Once you decide you want to buy a particular property, be quick. Keep your offer as clean as possible, with few or no strings attached,” adds Mr. Eltoft.

Most of all, stay balanced, says Mr. Eltoft: “It’s a big decision.”

Leave a Comment