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Yesterday was Better Than Today, but Today is Better than Tomorrow! Imagine it’s 2003 and you’ve just bought your first home in Toronto. You’ve likely put down a good chunk of your savings to get it and you’re probably eating noodles for weeks, but hey, you’re in! You’ve got a roof over your head and your foot finally in the door of the real estate market.
Fast forward 15 years to today. That first property you bought is now worth exorbitantly more. In fact, the average home price in 2003 was $318,029 compared to 2017’s average price of $822,681. That’s 158% market growth in 15 years. By buying that first home when you did, you have likely amassed a ton of equity and created exceptional wealth for yourself.
The Toronto real estate market has seen remarkable growth over the years—in particular these past few years—has greatly benefitted those that have already purchased property. While these individuals continue to build wealth as the market grows, those still looking to buy are having an increasingly difficult time getting into the market to begin with. They are also probably asking themselves the same question you did, “When is the right time to buy real estate in Toronto’s ever-increasing market?” Personally, I look back on my first-home purchase as the best—and scariest—decision I ever made. For any of my clients looking to jump into the market, I always tell them, “The best time to buy real estate is yesterday!”
Prices are at an all time high in Toronto, so making that first purchase can be daunting. You need to be well funded and with the new lending rules in effect this month, qualifying for a mortgage just got harder. The thing is, if you keep waiting to time the market, the more you lose by waiting.
With real estate the most important factor is time. The longer you wait to buy, the less your actual money is worth, and the more of it you need. This is especially true in today’s hot Toronto market where condo prices (the most affordable option for first-time buyers entering the market) are climbing in the double-digit percentages on a year-over-year basis.
Average home prices were up 12.7% last year. So, that being said, the best day to buy is always yesterday. If you’re waiting for the market to drop, it’s very likely that prices will still be higher than they were six months ago.
Should you wait to buy in a falling real estate market? Well, when it comes to the Toronto market, the answer is no! I always advise my clients to buy as soon as they are ready. Waiting to buy in a falling real estate market or waiting for a “drop” is a poor strategy.
For instance, while you’re waiting, one full year passes, and let’s say by chance it does waiver and drops 3% over a month or two. Over that year the market went up 13% (last year it was up 12.7%), even though the market wavered and you purchased in that down period, the market was still up 10% over the previous year.
If you have $100K to put down on a property but decide to wait in hopes that the market will drop and your dollar will go further — but instead, the market goes up 10%. Now, your $100K is only worth $90K.
Although it is possible to wait out for a negative year-over-year month (where this months average price is lower than that of the same month last year) keep in mind that this can happen, but it doesn’t happen equally across the entire market or for specific market types.
For example, in November 2017, the average price was down 2% year-over-year but condos specifically (what a first-time buyer would likely purchase) were still up 16.4%, but if you had waited 2 years for that negative 2%, you might think you’re getting a deal, but really you’ll just be paying more.
The sooner you can get into the market, the better. As Toronto home prices increase, your approach to getting into the market needs to change based on your financial situation. Buy a small property that’s within your means that will start to build your equity, rather than holding out for your perfect dream home. It’s important to be realistic about what you can afford on your first purchase, but the sooner you do, the sooner your equity will build and the closer you get to buying that dream home.
Check out some of the returns Pierre has achieved for his clients in just a few short years →
Working with an experienced Realtor is invaluable in getting your money to start working for you. They’ll be able to give you guidance on how to maximize your return and equity beyond the expected market growth. Not sure how to pick an experienced realtor? Check out this post where I discuss how to choose the best real estate agent in Toronto.
Like I said before: with real estate, the most important factor is time. The longer you hold that initial investment, the more you’ll earn from it and be able to leverage it into additional properties, building you a promising real estate portfolio. You can read more on our leveraging strategy here.
The simple answer is yes! But, if you’re looking for the ‘perfect’ time to invest, it’s never going to come. However, if you’re looking for a healthy, stable market to invest in with great growth potential then the Toronto condo market is yours for the investing — and primed for profit. Read this post, “Why It’s [Actually] A Great Time To Invest In The Toronto Condo Market” for all of the reasons why Toronto condos make great investment properties.
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