Homebuyer’s Strategy For Upcoming Months
By Elli Davis, September 30, 2011
The Annex by Zach
Spring and summer 2011 were pretty busy seasons in the Greater Toronto Area real estate market. Low interest rates are still fueling buyers’ activity and caused substantial activity in terms of sales. The average property price is rising swiftly, contributing around 10 per cent on a year-to-year basis.
Nevertheless, experts are predicting changes; the market never remains the same forever, and market activity moderation can be expected in the upcoming months. If you are considering buying a home but have not done so yet, here is a basic strategy for you.
First of all, consider your financial capacity well. Canadian households are among the most indebted in the western world, and defaulting on your credit can cause you significant problems. Prepare for various disaster scenarios (unemployment, serious illness, sudden large-maintenance expenses) and test your cashflow against your intended mortgage. Never forget to keep a six months’ mortgage cash buffer.
Plan well for switching homes. Do you expect more trouble while selling your old house, or while buying the new one? If your current home has lower marketability, for example if it needs substantial repairs or is situated in a less desired neighbourhood, sell it first. On the other hand, if you own a home in a popular location that is well maintained with moderate selling price expectations and you are searching for a very special new home, consider buying first. The home hunt may take months and you probably do not want to be renting all that time between closings.
Choose a reliable realtor and do market research together. You do not want to overshoot your asking price. On the other hand, do not be afraid to negotiate when buying. Some areas of the market may soon encounter lower demand than they used to, and sellers will have to moderate their prices. Patience can possibly save you thousands of dollars.
But don’t confuse patience with indecision. If you are serious about home buying and selling, prepare your checklist of dos and don’ts, and start the process now. Currently this is a good time for selling, and the more months that pass, the more the market has the possibility of slowing down and the average home prices may even decline slightly to correct the recent strong growth period — especially given the global economic situation. This is important especially if you want to move to a more prestigious area.