Times, they are a changing. I’m sure this comes as news to very few of us. In times of peril it’s only natural that we look for super-natural, heroic saviours. Below is an insight to what has changed this year, with respect to real estate, and where our heroes may come from.
During the boom it seemed the only type of affordable home was the fixer-upper. Today the fixer-upper home struggles dearly for consideration. Buyers are looking for a home that comes ready with upgrades; one they can just move in to and do nothing. It’s ironic how in times of struggle buyers become most picky!
Power of sale properties do not carry the same appeal they previously did. With falling prices and plummeting interest rates, most buyers realize they don’t need to settle for a foreclosure property to cash in on a great deal. In fact just last week clients of mine bought a $400,000 range home in Milton at about $30,000 below even 2008 prices.
One overlooked factor that has led to buyers controlling, to a large extent, the bargaining power, is the wider selection of properties on the market. Not only are there fewer buyers but there are more properties for sale. Much of this increased volume is due to panic, but it is there nonetheless. Make no mistake, there are many intelligent buyers out there looking to take advantage of the times — the reason it isn’t prevalent is because the vast majority of properties are not listed as well as they should be.
When the Bank of Canada lowered its rate to an all time low of one per cent, it pushed many of those buyers sitting on the fence towards making the move. It’s important to keep in mind that lower prices and interest rates means that for virtually anyone upgrading to a more expensive house or condo, the buyer’s market is a good thing as the spread between the two transactions (sale and purchase) will be favourable.
There are a few incentives being offered by the Government, in lieu of the market uncertainty, that have come up to help curb consumer fear. Aside from the historically low interest rates the government has increased the maximum RRSP withdrawal to $25,000, for first time buyers. This along with renovation tax credits and new first time buyer land transfer tax credits will put more money back in the consumer’s pocket. Far be it from me to equate the government with superhero as synonyms but nevertheless these incentives are there.
Perhaps the greatest change we’ve seen is the one that has not yet been realized by the majority. The impact of this realization has, and will continue to have, the most significant impact but thus far relatively few have benefited from this realization. This epiphany is the understanding that our real estate market — GTA — stands above every other in Canada. Consider that our residential real estate market appreciated at approximately five per cent year over year for almost the past decade. Now compare that with the fact that Calgary, Edmonton and Vancouver saw fluctuations that saw bold increases yet stunning decreases over the same period of time.
Our market’s sustainability, due to our economic importance and strength, as well as steady population growth, and the fact that Toronto is the business capital of Canada, means that our market suffers least and grows steadily, and without bubbles.
The fact that our market had the furthest to stretch before hitting the ceiling means the gaps of $20,000-$50,000 in savings available mean the most here. A home in Vancouver that has tailed of $50,000 may or may not rise back to its highest peaks — if it does, the timeframe may prove to be quite unpredictable. However, a home that has tailed off even just $30,000 in the GTA was already under priced to begin with and, therefore, has that much higher to climb, and will likely do so at the immediate onset of our market’s resurrection.
– Amit is a Realtor/Developer with Re/Max. amitp@rogers.com
