Even as the housing market in Canada show signs of cooling from the sizzling hot levels it reached earlier this year, it can still be incredibly challenging for buyers to get a good deal. But experts say there are ways for prospective purchasers to gain advantage.
“My partner and I got a great deal on a condo in Toronto through an assignment sale,” says Jonathan Tosti, a 28-year-old manager at a digital media company. In an assignment sale, a buyer purchases the property from an earlier buyer who bought the right to own the condo before it was built.
In many circumstances, the assignment sale purchaser would pay more than the original buyer. “But in the pandemic, some people got in over their heads and after they put down their money they wanted out,” Mr. Tosti explains.
“We worked with an agent who was an expert in assignment sales and were able to get our condo at below the original list price,” he says.
The housing market has been changing as interest rates rise. “It’s still very much a sellers’ market, but it’s stabilizing,” says Adil Dinani, founder and principal of Dinani Group Real Estate Advisors in Coquitlam, B.C.
Economists and real estate analysts anticipate a drop of as much as 20 per cent from peak prices reached earlier in 2022 for houses and condos across Canada, with demand cooling most at the suburban edges of the hottest regions such as Vancouver and Toronto.
For example, the number of multiple offers on properties is dwindling, Mr. Dinani says. “Now, there are bidding wars on maybe 20 per cent of the properties, while before it was much more common.”
Another bit of good news for buyers is that more homes are now taking weeks to be sold, compared with days and even hours when the markets were overheating, he adds.
Buyers – particularly younger, first-time buyers – will benefit by being calm and creative and by having realistic expectations when they’re home shopping, says Elke Rubach, founder and principal of Rubach Wealth financial advisers.
“One of the first things to remember is that ownership comes with responsibility. Most of us want to own something, but you have to understand at what cost. You don’t want to overleverage yourself,” Ms. Rubach says.
The Bank of Canada raised its key lending rate to 1.5 per cent on June 1 and has not ruled out further increases this year. This appears to be slowing and even reversing previous price rises – the national home price index dropped 0.8 per cent from April to May, on top of a 1.1 per cent decline from March to April – and national home sales fell by 8.6 per cent on a month-over-month basis.
This dampening doesn’t quite mean there’s a buyers’ market though, and prospective purchasers still need to be careful, Ms. Rubach warns.
“The first thing you should do is financial planning, even before you look to buy. Buyers should realize, for example, that even now to purchase and carry a house in Toronto you need to have an income of $200,000 a year – not a lot of people earn that,” she says.
In terms of being creative, Ms. Rubach suggests looking at different ways of coming up with down payment funds and financing. “There’s the ‘bank of mom and dad’ [borrowing from parents] for example, and people are also getting together with friends and buying properties,” she explains.
Buyers who do purchase with friends should be meticulous about the agreements they draw up with their co-purchasers, she says: “You may not want to own the property together forever.”
Deb Vukelich, a real estate broker with Royal LePage in Niagara Falls, Ont. advises buyers to look at government financing programs being offered, such as the First Home Savings Account announced in April’s federal budget.
“Account holders will be able to contribute up to $8,000 per year, to a maximum of $40,000,” she says. The money can be withdrawn tax free and applied to a purchase, but only if it’s for the purchase of your first home.
First-time buyers can also withdraw up to $35,000 from their registered retirement savings plans if they’re buying a home, but this money must be paid back into the RRSP within 15 years to avoid being taxed.
There are also short-term tactical steps that buyers can take as they embark on their quest to buy a home, says Thomas Elltoft, owner of Niagara-on-the-Lake Realty in Niagara-on-the-Lake, Ont.
“You need to be prepared and well-educated about the particular housing market you’re entering,” he says. For example, the Niagara region is within the Golden Horseshoe that extends through Toronto eastward to Bowmanville, Ont. but within this area the markets in different neighbourhoods can vary widely.
It’s helpful to find an agent who concentrates their business in whatever neighbourhood you choose, he advises.
Mr. Elltoft agrees with Ms. Rubach that getting the financing lined up in advance is most important for buyers. “You need to understand what you can afford in the best and worst scenarios,” he says.
When the housing market was hottest earlier this year, buyers were looking for quick opportunities such as buying a pre-construction home or condo that went into default at a bargain price. Mr. Elltoft says the market is calmer now, but buyers still need to be able to act fast when they decide they’re ready to buy.
Interestingly, he suggests house-hunting on a sunny day when you might rather be somewhere else.
“When the weather is great or it’s a long weekend more people want to go to the beach and fewer are looking. On a cold or rainy day, I end up having more showings,” he says.
“Once you’ve decided you want to buy a particular property, be quick. Keep your offer as clean as possible, with few or no conditions,” Mr. Elltoft adds.
Most of all, stay level-headed, Mr. Elltoft says: “It’s a big decision.”