Are you feeling left out of the Toronto Real Estate Market?
Keep Renting and Save for a Down Payment...
or BUY NOW?
Over the past several weeks, many of the first time buyers who have met me for coffee came in feeling that they have been left out. "Left out of what...?" you may ask.
Well, left out of the current Toronto Real Estate Market.
The dilemma stems from the debate as to whether they should wait and save up for a larger down payment before they get into the market or whether they should use whatever assets they have now and buy that first home.
The common theme was that these prospective buyers felt that they were being left behind and squeezed out of the current sellers' market
So trying to save up that proverbial down payment can work, but it may not be enough because you are still paying rent and likely only saving a small amount each month. At the same time, prices of homes and condos are still rising alongside the potential threat of rising interest rates still looming. This could leave you further behind by it costing you more to buy the home and also more to carry it. Add to this the rumours which suggest the legislators are considering increasing the minimum down payment from 5% to 10%.
If you look at the annual average price increases in the Greater Toronto Area (GTA) from 2012 until August of 2016, you will notice the average additional dollars required to purchase a home would be $58,966. Assuming you can qualify with 5% down of the current purchase price, that would equate to anywhere from an additional $2,948 to $5,004* in cash required for your down payment.
Consequently, as soon as you know that you have an acceptable amount for a down payment, you should get into The Toronto Area real estate market as soon as you can, especially as prices continue to rise at current rates.
Many potential buyers are discouraged by the prices of detached homes in their preferred neighbourhhoods as they feel that homeownership is beyond their reach. Well, there are always options. You may consider another neighbourhood, different type and style of home, or even something smaller. Just keep it affordable.
For a discussion on how you may enter the market let's Start Here