The real estate market in Toronto has seen some significant shifts over the past few years. With the recent introduction of a new tax category, there is an urgent need to have a discussion about whether or not this is actually the best thing for our city.
Many people will argue that it’s only going to create more inequality, but those with lots of money already have enough. What we really need to be discussing is how much money these very wealthy individuals are making off of the additional taxes they pay.
It was reported last year that the top one per centers own almost half of all wealth in Canada. In fact, their share rose by nearly two percentage points between 2010 and 2016!
That means the rich are getting richer while most other Canadians are struggling to keep up. It also indicates that the rich get wealthier at a faster rate than everyone else.
In comparison, Statistics Canada reports that average annual growth in household net worth was 5% from 2004 to 2013, which is significantly slower than what the richest one percent experienced during the same period.
Another way to look at this is that even though the rich made slightly more money each year, this didn’t translate into as large a gain in overall wealth as compared to previous years.
This article will discuss why having a lower personal income tax rate is good for your community and your wallet.
Demand is high
The market for homes has been very hot here in Canada’s largest city of Toronto. While there have been some changes to the rules that govern how much money people can borrow, most experts agree that it does not seem to be having an effect on overall home buying activity.
Many are now predicting that we will see this state of affairs continue well into next year! If you are thinking about investing in or selling your house at the moment, I would recommend talking with other owners to get a sense of what is working for them and which strategies are bringing in the results they wanted.
There’t necessarily one surefire way to succeed as a homeowner, but by being open to different approaches you will likely find something that works for you. Many things have worked recently for many buyers so don’t give up if this early in your journey as a property owner.
Supply is low
This year we are experiencing what some call a seller’s market, which means there are more sellers than buyers at any given time. When this happens, you have to think about how much supply is available in the current market.
Supply comes from two main sources: new homes that are being built and older houses that people sell or down-price. The number of both types of properties drops as the market tightens up, so when it seems like there aren’t very many, consider how much demand there is for them!
Demand is high because people want and need housing, especially if they are looking to move into a larger house or start a family.
At this stage in our real estate cycle, most people agree that the market has become overvalued.
Overvaluation occurs when prices rise too quickly due to growing expectations of what a home will be worth. While a fast price increase may make sense for someone who wants their own place really soon, it isn’t great news for anyone else wanting or expecting to pay less for a property.
That’s why there are strategies such as buying a house with a lower purchase amount, paying off debt first before investing, or putting your money in things like dividend income investments instead. All these can help you keep your spending in check longer!
If you’re thinking of selling yours, now might not necessarily be the best time unless you have no other options.
House prices are rising
While some may argue that the real estate market is not as strong as it was, there’s one major factor that makes the case for a healthy housing market in Canada impossible to make.
House prices have been going up consistently for more than twelve months now, which is well above what we would expect to see in a normal market cycle.
When house price growth slows down, we can be certain that a recession has begun. We saw this happen back in 2016, when home values fell sharply before bouncing back earlier this year.
So even though you might read about how expensive buying a house is in Toronto these days, don’t believe it!
There’s still plenty of room undervalued homes available in our city, especially if you compare today with last fall. Check out our article here to learn more about why this is and what you can do to get great value on a home.
This article will also talk you through other signs of a weakening housing market like reduced inventory and lower number of sales.
Buy now or wait until prices rise further?
The best time to buy real estate is right now, not next year when prices could be even higher! While it may feel like there’s no way you can afford a house at this price, that isn’t necessarily the case.
Many people have made a large profit off of buying a property they would have considered too expensive back in the summer. So don’t worry about being able to afford a downpayment – you probably already own part of the home you want.
Instead, consider whether you are willing to pay more money than you might otherwise if you waiting for lower prices. This article will talk about some ways to get affordable housing in Toronto.
Find the right place
The best way to determine if the real estate market is improving or worsening depends on what kind of home you are looking for. If you want a large house with lots of land, that’s probably not the best time to look.
If you like more urban living, buying an older condo may be your better option. An apartment downtown close to the subway is definitely different than buying a suburban bungalow!
You can also check out our article about how to buy a house in Canada efficiently to see whether now is a good time to start looking.
Consider your budget
Even if you have a large amount of money to spend, buying or renting an apartment is not the best use of that money unless you are very careful about how much you pay for it.
It is extremely difficult to get a good deal when buying or selling a house. There are few cities where people do not try to maximize their return on investment (ROI) with real estate. This is why most homeowners end up spending more than they should per square foot – and it can cost them heavily in the long run.
There are many tricks and gimmicks used to create what seems like a cheap property, but don’t believe everything you read. Some brokers may put pressure on you to buy, making it seem like the better option.
The trick is to be aware of just how expensive the properties next to yours really are!
Be wary of agents who talk too highly of their sellers or themselves while representing others. Agents are paid by the seller or buyer, so there will always be someone paying them to advertise for them.
Sellers and buyers are usually happy with their agent, so it is unlikely that anyone would say anything bad about them, but sometimes things take longer than expected, something that happens quite frequently in the industry.
By using common sense and doing some research, you will know whether or not this broker is worth working with.
Consider your family
As mentioned earlier, how much housing you need depends on what kind of person you are as a person. If you are looking to invest, then having a lower income limit is less important than if you want to live in this city for rest of your life and have kids.
If you are just starting out or thinking about buying a house, consider putting off the purchase until you can afford a larger downpayment. A higher down payment will help prevent expensive surprises when it comes time to close on the property!
For most people, a one-bedroom apartment is sufficient unless they have very young children. For parents who do, look into whether there are public parks nearby that their child can use.
People with large families may find themselves needing more space, which is why it’s important to determine how many bedrooms your budget allows for.
Are you ready to settle down?
Settling down is not the same as buying a house with a lot of bedrooms and bathrooms for a high price. Rather, settling down means starting a family!
Settling down also does not mean living under a mortgage that will take away all your money quickly. Having a large amount of debt can prevent you from having enough spending money, which could hinder your ability to start a family.
Saving up some money (by putting off having children for a few years) or paying off your home slowly can help make it easier when the time comes.
