According to data from Rent Seeker, the real estate market in the greater Toronto area is experiencing somewhat of a slowdown. The housing market declined for the third consecutive month in July, and sales dropped more than 40 percent, based on information from the Toronto Real Estate Board.
The average price of homes sales went down as well, and while the thought of a slowdown in the real estate market may be scary to some people, there are ways to look at it as an opportunity, particularly when sales and rental prices have been so expensive in Toronto over recent years.
The following are some things to know when the real estate market starts to cool.
Owning Instead of Renting
There are a lot of renters in Toronto, as in any urban area. The cost of living is relatively high, and for many people, particularly young professionals, renting may just make more sense, but if the real estate market starts to decline, you may find that it’s your opportunity to buy.
When the price of real estate is down, and interest rates are still low, you may get some excellent opportunities for attainable home ownership that you wouldn’t have access to in a thriving market.
You can also think about adding to your real estate portfolio or starting a portfolio if the market seems to be slipping.
There tends to be an inverse correlation when you look at your long-term returns and general valuations when you purchase a piece of real estate.
Something else you should think about in general is the fact that rent prices aren’t likely to go down when property prices go down. Usually, the opposite happens, which can mean it’s a good time to start thinking about being an owner, and also a landlord.
When To Act
A lot of times people will wait too long thinking a better opportunity will come along as the market goes further down, but then it ends up going the opposite direction, and they missed out.
It’s hard to know when the right time to act is, but generally along with looking at data and how it fits within the framework of seasonal trends, you can also do your own research. Look around and see how many “Reduced Price” signs you see or gauge how long it’s taking houses to sell in certain areas.
Take advantage of a real estate agent as well, because they’re going to know not only market trends, but they can also access their listing service to see how long homes are sitting and where there are price reductions.
It is tough to tell when the bottom will hit in a market, but if you’re looking for a home you’re actually going to live in, the idea of further depreciation isn’t going to be as big a concern for you as someone with a short-term timeline.
Finally, if you are planning to buy and the market is somewhat slow, even if it’s not in a full-blown downturn, you can not only negotiate on prices, but sellers are more likely to make other concessions that you couldn’t get if the market were hot. For example, sellers might be more likely to make repairs or pay closing costs.