Are you having a hard time getting your mind around the real estate market? Do you feel paralyzed by either the Fear Of Missing Out (FOMO) or the Fear Of Over Paying (FOOP)? If you were ready to make a move earlier this year but didn't act and now you have been watching prices fall and still feel stuck, then why not get some help by having The Jenkins Team and our trusted mortgage brokers involved to help you fully understand the reality of this market and whether now is a good time to buy or sell. Below you will see a snapshot of the data from The Toronto Regional Real Estate Board (TRREB), BUT you need us to help you see the real opportunities in the market. It is easy to get swayed by news reports that speak in national averages and national trends but savvy real estate investors know the true market is the details you learn about your local market which can be as detailed as a street level or a building level trend. The regional or national numbers don't mean anything at that point. We will show you further below why now might be a very good time to buy.
The average selling price of all home types for September, in the Greater Toronto Area was $1,086,762 and inched up ever so slightly making it the second month in a row that prices have not fallen since March of this year. Sales only reached 5,038 units in September, down 44.1 percent from last September and 589 units less than were sold this past August. New Listings were up 700 units over August for a total of 11,237 but were down 16.7 percent from last year. See TRREB Report HERE
Higher borrowing costs and fear of recession in 2023 may be keeping buyers and sellers on the sidelines.
October generally represents the peak of the fall market, so it will be important to see where price trends head over the next month, said TRREB Chief Market Analyst Jason Mercer.
In Durham Region average selling prices did not follow the TRREB trend as average selling prices of all home types declined from $920,269 in August to $915,021 in September. This was also seen in Detached homes down from $1,012,181 to $1,002,111 and Townhomes down from $809,189 to $805,082 and Condo Towns down from $685,033 to $657,657. Again, unlike the TRREB trend New Listings declined as did total Active Listings in Durham.
During the crazy ride of rising prices over the previous 2 years we often heard the phrase "Fear Of Missing Out" as one of the drivers causing selling prices to move up. Now the "Fear Of Over Paying" is holding some buyers back. The psychology of buyer and seller behaviour on such an emotional purchase does play a big role in buying and selling trends. If buyers and sellers think they can "time the market" they may be in for a big surprise. It is almost impossible to "time the real estate market" even with the abundance of data available to the consumer. The declining/balanced market we are in will not linger forever and when it turns it could turn fast. Housing shortages in the GTA are an election issue, growing immigration numbers in the GTA will continue to put pressure on the housing market. So when this market is ready to change it will likely change fast. From a seasoned real estate team perspective and real estate investing perspective going back as far as the early 1980's we know there is opportunity in every market. For example:
Did you know that even with rising mortgage rates in this declining market it is still possible to buy a home for less money and still pay about the same monthly mortgage payment. We did the math and here is what we found. A home that was selling in the early spring for $950,000 could now be bought for about $800,000. Mortgage rates at the end of February for a 5 year fixed were about 2.99%. Mortgage rates now for a similar 5 year fixed are about 4.59%. Here is how the numbers work out.
Scenario 1: March September
Purchase Price $950,000 $800,000
10% down payment $95,000 $80,000
Mortgage Insurance $26,505 $22,320
Mortgage rate 2.99% 4.59%
Monthly payment with
25 year amortization $4,167 $4,146
Land Transfer Tax outside
Toronto $15,475 $12,475
Total Mortgage including
mortgage insurance $881,505 $742,320
Scenario 2:
March September
Purchase Price $750,000 $650,000
10% down payment $75,000 $65,000
Mortgage Insurance $20,925 $18,135
Mortgage rate 2.99% 4.59%
Monthly payment with
25 year amortization $3,290 $3,368
Land Transfer Tax outside
Toronto $11.475 $9,475
Total Mortgage including
mortgage insurance $695,925 $603,135
If you look at the same scenarios with a 20% downpayment, you are even further ahead because monthly mortgage payments are even lower and your total debt outstanding is considerably lower because you have a larger down payment and no mortgage insurance costs. In fact the monthly payments are lower at the higher interest rate than with the lower rate of 2.99% because the total debt is lower.
What this tells you is that with the right information and a very good mortgage broker and the Trusted Jenkins Team at your side you can buy a home today for less money "out of pocket", a lower total mortgage to repay and you can do it for about the same or less mortgage payment as you could before the market turned. You are also more likely to find the right house and not have to compete for it, like was the case earlier this year. Understanding the true reality of the market is always key to a smart successful purchase and sale. As a first time buyer there are also further benefits such as the Land transfer tax rebate of up to $4,000 which was not included in this example. If the goal is to get into the real estate market to build a solid financial foundation for your future then don't be afraid of overpaying, prices are set by the market everyday. If you think it's best to wait well you may miss out. The only thing that's assured in real estate is that the selling prices today are real and everything after today is speculation.
Contact us so we can better inform you about the true reality of the real estate market.
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