The housing market in Toronto has remained remarkable resilient, even as global financial markets have been roiling. Bidding wars through the spring and summer pushed prices higher but economists and real estate agents expect a more moderate pace in the fall.
These seven strategies will help sellers and buyers prepare for the coming months:
Set an offer date - for now. Agents still believe it’s wise for homeowners to hold off receiving offers on a property for sale until a specified date. That way, more potential buyers have a chance to see it and the increased traffic may bring competition.
But some agents are nervously watching to see if offer dates go by without a single bid as the fall market gears up. When that starts happening, agents will recommend switching to a strategy of “offers welcome any time”.
If you’re planning to sell your house eventually, perhaps it’s time to stop procrastinating. In August, the average price of a home in the Greater Toronto Area rose by 10 per cent year-over-year to reach a record high of $451,663. Toronto-Dominion Bank economist Francis Fong is forecasting that sales and prices across Canada will drop approximately 10 per cent from current levels, but he does not think that will happen until the Bank of Canada beings to raise interest rates - likely in early 2013.
If you’re shopping for a mortgage, consider signing up for a five-year term. A number of the banks have lowered their 5-year fixed rates again in recent days, points out economist Robert Kavcic of Bank of Montreal.
Prepare to negotiate if you’re a buyer with more than $2-million to spend, says real estate agent Janet Lindsay of Chestnut Park Real Estate Ltd. “Buyers have a really good selection right now at the high end - and we haven’t always had that,” says Ms. Lindsay. She recommends that buyers be well-armed with sales figures about comparable listings before they make an offer. “Buyers can negotiate as opposed to not being able to negotiate,” she says referring to the tight supply in the past.
Sellers need to set realistic asking prices for a balanced market - particularly if they are dwelling in the upper echelons, says Ms. Lindsay. “I think Toronto buyers are extremely sophisticated and knowledgeable about what’s going on in the market,” she says. “If you’re not priced to attract attention, buyers will not pay attention to you.” She adds that there are still buyers out there but the recent gyrations in financial markets - along with fears of a global economic downturn - can be unnerving for consumers.
Do you sell first or buy? “It’s the most important part of the whole process as they begin”, says real estate agent Duncan Fremlin of an owner’s decision to trade an existing house or condo. Mr. Fremlin, of ReMax Hallmark Realty Ltd., advises homeowners they need to buy first if they are moving from one good neighbourhood to another. Relatively scarce listings mean they may have to shop around for a while. But if you’re selling a property with less appeal - say it’s on a busy street or is badly in need of renovations - you need to sell first if you can’t afford to carry two properties.
Don’t overstretch when buying a house and pay down existing debt. Canadian consumers are more indebted than they have ever been, according to Statistics Canada figures released this month. In the second quarter, the ratio of household credit market debt which includes mortgages, consumer credit and loans, to disposable income rose to 149 per cent form 147 per cent in the previous quarter. Bank of Canada Governor Mark Carney has cautioned Canadians to rein in credit-fuelled spending. Some market watchers fear the housing market has become too frothy as a result of a willingness among buyers to take on huge mortgages.