IS TIMING THE REAL ESTATE MARKET A GOOD INVESTMENT STRATEGY?

is-timing-the-real-estate-market-investment-strategy

The one thing that never gets old in real estate is that all too familiar narrative that the market is going to crash. As we watch home prices climb, those that are in the market already are thrilled while those that are still renting may feel like they’ve missed the boat. So when it comes to timing the real estate market, is waiting for the market to crash a good investment strategy? 

 

WAITING FOR THE REAL ESTATE MARKET TO CRASH

 

There are two constants in real estate: prices will always go up over the long-term and there will always be rumours of a pending market crash. The same articles and opinions that are out in the papers today have been the ongoing narrative since well before Pierre became an agent 14 years ago.

 

When we talk about the market crashing, we have to remember that real estate is a long-term investment. There has never been a point in time where Toronto home prices have come down and not gone back up higher than they were before, even if it takes a few years.

 

This recent Globe and Mail article on timing the real estate market and its inevitable appreciation cites “Canada’s housing market doesn’t have a history of severe depreciation even in tough times and that over several decades, Canadian home prices have appreciated more than 5 per cent a year”.

 

When you’re buying a property, you’re buying with the assumption that owning that property in 20 years will be worth more than not owning it altogether. So, if you’re waiting for Toronto’s housing market to crash as a means of timing the real estate market, you’re missing out.

 

THE BEST DAY TO BUY IS YESTERDAY

 

When people ask us when the best time to buy or invest is, we tell them the best day to buy is yesterday. Yesterday was better than today, but today is better than tomorrow.

 

Allow us to explain.

 

With real estate the most important factor is time, but timing the real estate market is seemingly impossible. The longer you wait to buy, the less your money is actually worth.

 

Let’s say you have $100,000 to invest but decide to wait in hopes that the market will drop and your dollar will go further. Instead, over the next year the market goes up 10%. Now, your $100,000 is only worth $90,000.

 

It doesn’t do you any favours to wait or try to time the market by waiting. The idea is to buy when you’re ready to buy and be able to hold for the long-term so your investment is safe and profitable.

Related: How to Spot a Profitable Rental Property in Toronto

LOOK FOR SIGNS OF A BUYERS MARKET

 

When the real estate market is referred to as a “buyers market” it simply means there are more homes and condos for sale than there are buyers. With so much choice, buyers have more negotiating power and could see some flexibility on price.

 

While the prices will likely be higher than they were the year before, during a buyers market the competition is low so you may be able to sway a seller with a lower offer price knowing that if they pass it up there may not be another buyer for some time.

Related: Pre-Construction VS Resale Toronto Condos

TRYING TO TIME THE REAL ESTATE MARKET

 

If timing the real estate market is your M.O., you could also consider buying in the winter. The peak seasons for real estate are spring and fall where most sellers wait to list their property to take advantage of the inevitable price surge that comes with it.

 

Stay active on your property search December through February as you may be able to get a good deal. Sellers who aren’t waiting until spring to list are typically motivated to sell now. The Toronto condo market in the winter is slower and listings will be on the market for longer than they normally would compared to the spring or fall markets. With fewer buyers perusing in the winter months, sellers will get antsy and become more flexible with their sale price.

 

While an attempt at timing the market isn’t the best investment strategy, working with the right realtor is. They are your number one advocate and can guide you towards the best investment opportunities available to you when you decide the time is right. While we can never predict the exact return an investor will achieve, we can certainly maximize the odds of profitability through reasoning, logic, proper advice and knowing the market inside-out.

 

A market is called a market because, well, it fluctuates — forever. If you’re looking for the ‘perfect’ time to start investing in Toronto real estate, it’s never going to come. But 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.

 

Book a call with us to get started on creating an investment plan that works for you. Building wealth through real estate, it’s what we do.

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