If you’ve considered buying at any point in 2009 chances are you’ve also asked yourself if now is the right time to buy. Here’s a little insight on the topic.
Just about everyone has seen and acknowledged the widespread drop in real estate prices across the GTA. The point of debate, as we move towards spring, seems to be whether now is the best time to purchase, or if waiting until later in the year will ultimately save you a few thousand dollars extra. There are supporters of both sides of the coin; those that say we’ve seen the worst, and those who believe that the worst is yet to come. In my own opinion I think it’s most important to not lose sight of the real question, which isn’t so much will prices continue to drop, but rather how much more could they drop, even if they do?
While I don’t have the benefit of a crystal ball I do believe that Toronto’s real estate prices have tailed off about as much as they logistically can. While many economists will lead you to believe that our overall market will continue to spiral down, it’s relevant to note that the climate of our real estate market does not rise and fall at the same pace of the overall economy. To illustrate the point — consider that while all hockey players see their athletic prowess deteriorate with age, the best don’t rise and fall with the same dramatic nature of the rest of the pack. Wayne Gretzky and Mario Lemieux, while slowed down somewhat by age, played at a very high level, above most, all the way into retirement. Real estate is like the hall-of-famer, MVP on Team Economy.
So while I don’t pretend to be as well experienced in the economy overall, I do believe with good reason that real estate prices will begin to stabilize this summer, across at least the better areas of the GTA.
One serious fallacy the so called experts often make when assessing the immediate future of the real estate market in the GTA is likening it to our stock market. The two are completely different animals. Without getting into theories and details, understand that some of the most popular blue chip stocks, bank stocks, have dropped as much as 50 per cent or more. If stocks and real estate were really similar then even the strongest real estate in the GTA — not the weakest — would be worth at best half of what it was last year. I can assure you that not only has the best survived, in many cases the descent has been only a few thousand dollars. Bayview Village in North York comes to mind as one such area that has demonstrated resounding strength even in the face of this market. At the same time, you’d be hard pressed to find any common place real estate that has been reduced to half its value.
Having said all of that, of course you want to evaluate what the mere possibility of falling prices throughout Summer 2009 could mean. Again, with the unfortunate lack of assistance from a crystal ball, I believe that at the very least the most dramatic impact on the GTA’s real estate market has passed. So if you’re looking for an above-average home, are buying as well as selling, or considering one of the more popular areas of the GTA, logically, waiting in the hopes of saving a few thousand extra, doesn’t appear to be a decision that will prove worthwhile. Of course your specific situation will ultimately determine your best course of action, but if you’re looking for a general rule of thumb here, this is it.
If there is an ultimate rule of thumb it’s that the best time to buy is when you’re ready — financially and emotionally. At the end of the day you’re making arguably the largest purchase you’ll ever make, and choosing the place you will call home. Allow me to humbly suggest that in this particular case, money not be your only or ultimate goal.
If you have any questions on this article, or real estate in general, feel free to contact me.
Happy Hunting!
– Amit is a Realtor/Developer with Re/Max. amitp@rogers.com
