Why now could be a good time to enter the Toronto Housing Market
In December, when the market is experiencing a slowdown, homebuyers may have the opportunity to secure a great deal. However, with the Bank of Canada's anticipated interest rate reduction in the coming year, it's predicted that homebuyers will reenter the market in droves. This could potentially increase competition and drive up property prices. We are potentially heading into an unpredictable future. For many potential homeowners, the current moment could be the ideal time to purchase.
Given the predictions that interest rates may start to decrease as early as April, variable-rate mortgages are becoming increasingly appealing. The current spread on variable rates is quite favorable, providing an opportunity to benefit from a downward curve while making a significant purchase.
However, variable-rate mortgages might not be the most suitable option for first-time buyers who are not comfortable with high levels of risk. Yet, they could be a viable choice for seasoned investors.
Many astute investors who feel they have a good grasp of the market dynamics are willing to wager on the likelihood of variable rates decreasing. Nonetheless, prospective homebuyers should ensure they have stable employment and financial security, especially since there's an anticipated economic downturn. If there are concerns about job stability, there might be better times to enter the market. Also, it's advisable to wait if you're skeptical about the Bank of Canada starting to reduce the overnight rate soon.
Analysts have been known to err in the past. It's crucial to consider this information, seek experienced advisors and determine if it's a reliable foundation for your decisions. In Toronto, Canada's premier housing market, sales could be faster. Nevertheless, the wave of newcomers is anticipated to bolster future growth and demand. The surge of new arrivals into the country is a positive trend for housing demand. Some of those who have been renting may now start to transition into buying properties.
According to recent data, as of November 2023, the average home sold price in the Greater Toronto Area (GTA) increased by 0.3% year-over-year to $1,082,179 despite a 6% decrease in sales compared to November 2022 (sources: wowa.ca, trreb.ca). However, the market is showing signs of resilience with seasonally adjusted sales rising by 1.7% in November from October to 4,932 homes (source: Reuters). This could be an indication of the impact of the growing population on the housing market.
In conclusion, as we head into December, a traditionally slower period for the housing market, potential homebuyers may find unique opportunities to secure a great deal. However, with the Bank of Canada potentially slashing interest rates in the upcoming year, there could be a surge of homebuyers reentering the market, potentially heightening competition and escalating property prices. This implies an unpredictable future, making the present moment a potentially opportune time for many prospective homeowners to make a purchase.