How buyers can prepare for the busy buying season – post-COVID-19
Spring is typically busy season in real estate, but this year, COVID-19 has brought the market to a slowdown.
One day soon, though – and we hope very soon – things will return to “normal,” and consumers will be back looking for new homes and condos in the GTA and elsewhere, driving the housing market and the economy.
In the meantime, prospective homebuyers can take advantage of this expert advice from a who’s who of new home marketing executives.
Before COVID-19, the spring market was shaping up to be very strong, based on early sales results so far this year. With historic lows in inventory, especially in the GTA, new lows in interest rates and changes to the mortgage stress test, sales are already very brisk.
The outskirts of the GTA will continue to provide affordable options. Locations such as Brantford, Ancaster, Hamilton, Newcastle and Barrie will continue to offer lowrise alternatives for homebuyers. In Toronto and elsewhere in the GTA, lowrise homes will continue to become available in the form of stacked, back-to-back and traditional townhomes. In the city, the future for lowrise alternatives will continue to be the redevelopment of potential B and C class mom and pop commercial plazas along transit lines.
In the highrise market, we will see a major uptick in 905 sales, as end users and investors see greater value in price per square foot, with continued concerns about pricing in the city. Developers will continue to make units smaller to drive sales in the core, and a new market will emerge north of Eglinton, with better availability of two- and three-bedroom condos for first-time buyers and families wishing to stay in the city.
At the end of the day, always buy within your means and with your family’s best interests at heart.
More than 60 per cent of annual new home sales usually occur in a four month period in spring, and with the right preparation, you could experience the joy of buying a home.
1. Eliminate emotion through preparation
A new home purchase will be one of the biggest events of your life, and often an emotionally charged situation. We spend more time preparing to buy a new pair of $100 shoes than we do $1-million property. Uncertainty causes confusion, and confusion leads to indecision and inaction. Knowledge, on the other hand, leads to confidence, and confidence leads to power – so get prepared.
2. Set your priorities
If you don’t know where you’re going, any road will get you there. Focus on your target by creating a Motivation and Housing Needs chart. On the left column, list your (and your partner’s) motivations, such as marriage, family or a new job. On the right column, list your housing needs, noting how your life changes affect your housing needs. This isn’t a wish list, but a very real and practical definition of your current and maybe anticipated housing needs. This step will clearly define your priorities.
3. Dare to compare
If you have selected potential locations and housing types, it’s time to create a spreadsheet and write it all down. List the builder, site and home type on the left, and across the top note the location, home size, financing, price, features and finishings. Give each of these key points a score from one (the least desirable) to five (the most), and come up with a total score for each selected home. The objective is to narrow your favoured choices to two.
4. Know your costs
This is the most fundamental part of the homebuying process, but it’s also the one where people are the most unprepared. The mortgage stress test adds a significant variable to the approval process. How much can you afford? Will you have to “drive till you qualify”? What are your anticipated closing costs? Do you have all the funds necessary? That’s a lot of questions, but the good news is that all of the major banks can help you through this process. Take advantage of this guidance and prepare yourself – well before you attend any open houses or new home openings.
5. Take action
Finally, don’t be indecisive. Once you have conquered the first four steps, you are ready to take action – with confidence.
Chairman & CEO
PMA Brethour Realty Group
Considering the way prices are these days, it is essential that prospective buyers, as a first step, get pre-approved for a mortgage. And be aggressive about finding financing. If you don’t have the full deposit, you can always go to a B lender for a second mortgage or line of credit. Some buyers are fortunate enough to be able to obtain funds from the “Bank of Mom and Pop.”
If all else fails, look at purchasing a unit with a friend or family member for co-ownership. You can both live in it as roommates, or sell it outright and take the profit as your seed deposit money for your own individual units.
My point is: Move heaven and earth to get into the market. Prices are going up, and supply is still very tight, which bodes well for owners. If you postpone, as the years pass, prices will be even higher, and you’ll wish you’d gotten into the market years ago. Think about how happy homeowners who bought several years ago are today, having seen their financial investment grow.
Remember, too, that whether you buy a condo, townhouse, semi- or single detached house, it doesn’t have to be in Toronto or the GTA. Keep an open mind and you’ll find great affordability in markets such as Hamilton, Kitchener and even Picton.
Expand your horizons and be prepared to try alternative methods for attaining homeownership. In the end, it will all be worth it.
Founder & CEO
New home sales were off to a great start this year, and developers are working hard to offer more affordable housing solutions and incentives. If you’re in the market for a new home or condo, it’s definitely a great time to buy.
Just make sure you know what you want (or really need) and have shopped the competition to ensure you’re investing in the right neighbourhood, product and builder.
Consider locations outside Toronto and elsewhere in the GTA that are close to transit. Places such as Hamilton and Milton are especially hot, with some exciting new projects geared toward first-time buyers. Meanwhile, pockets of Pickering and Ajax still offer exceptional value for growing families.
We’re also seeing a lot of empty nesters eyeing cottage country in locations such as Collingwood, Blue Mountain and Huntsville, where you’ll find beautiful, four-season lifestyles, complemented by the same urban amenities you’d find in the city.
In Toronto and elsewhere in the GTA, demand will continue to exceed supply for the foreseeable future. We are looking at ongoing population growth from immigration and migration, as Toronto continues its role as an international city and economic hub. Market prices will only increase as time goes on. With the average rent for a one-bedroom apartment in Toronto already more than $2,500 per month, a new condo is still a wise and likely lucrative investment.
Carefully selecting the right location is a key starting point; location, location, location has long been the mantra for real estate. Choose a building in an up and coming area for a better price point, or in an established neighbourhood where you’re likely to pay a little more. Either way, buy the best condo and suite you can for the money, keeping in mind your lifestyle. Proximity to transit is also important; consider that investors usually purchase close to mass transit, since that’s a feature that appeals to renters. It’s all common sense.
This market will not change overnight, and may never change. We are still in a low-interest-rate environment… and who knows how long that will last? If you are in a position to get into the condominium ownership market, my advice is to buy now, rather than later.
President & CEO
Baker Real Estate Inc.
Friends often ask me where the best value in the GTA is, since I have been marketing new homes and condos for 25 years. What area has the best opportunity for appreciation?
I usually recommend heading east, to Courtice, Ajax, Bowmanville, Oshawa… really anywhere in Durham or Clarington is a great option for new-home buyers today. East GTA offers very affordable pricing compared to the west, as well as every feature you could ever need, including regular GO Transit service to downtown Toronto, easy access to the lake and beautiful conservation areas for hikes. There are excellent schools, tons of shopping and a great family lifestyle. The east is where it’s at!
I would also advise prospective buyers to explore the federal government’s First-Time Home Buyer Incentive program which offers a down payment boost of up to 10 per cent. It doesn’t need to paid back until you sell your home, at which time the government will share in the equity you have built up over time. It’s an excellent opportunity that not enough people are taking advantage of yet.
Spring is typically the busy season in real estate, and this year the market in southern Ontario looked like it was really going to heat up. But this area is so popular year-round it’s unique: Traditional seasonality is quickly blurring. High demand, combined with a shortage of housing supply, ensure this trend will continue. In resale, for every house listed for sale there is a buyer ready and waiting. The best thing buyers can do to ensure they get what they want, when they want, is to get themselves in the ready position.
Despite mainstream media suggesting it is next to impossible to purchase a home here, opportunities present themselves all the time, especially to those who are ready to go. New homes provide a great option. By signing up for mailing lists of reputable builders in your areas of interest, prospective buyers will be the first to know when a community is coming, what the housing options are and what the price points will be. This process, and the information that comes with it, gives buyers knowledge to make informed decisions, better positioning them for their next move.
Fraser M. Wilson
International Home Marketing Group