How to capitalize on the GTA real estate market correction?

Great opportunity for first time home buyers

As a first-time home buyer, getting into the real estate market can be difficult as the market is now getting segmented by multi-property owners. Real Estate investors are the top competition for newcomers as the number of offers on a property has greatly increased over the years. Initially, first time home buyers took up the majority of the market. Recently due to covid, the number of multi-property owners has increased greatly overpowering the first-time buyers. With both multi-property owners and the increase of housing prices, it doesn’t look too good for people trying to get into the real estate game for the first time, but we wouldn’t say it’s impossible. According to Royal LePage, in 2022 the average home price was expected to rise by 10.5%. Now there is new data that shows by the end of the fourth quarter of 2022, prices are expected to rise by 15%. This may not seem like good news for first time buyers now, but soon people are going to realize with the housing market continuing to rise the home sales activity will continue to fall since no one can keep up with the market. This is going to lead to a market correction by 2023 and there is some evidence that shows the overall benchmark price of a property could drop close to 5% on a quarterly basis. This will be the best time to enter the market taking advantage of the first-time home buyers’ loan to help with the down payment. The best time to start looking for a property would be in January of 2023. The majority of people don’t want to deal with the cold weather to shop for a home, so prices are the lowest during this time. You also have a higher chance of getting the house for below asking since properties take longer to sell during this time. You may not have the best choices to choose from for your first house, but you will get a better deal and have less competition to deal with.

How to identify a good property depending on your purpose

Depending on your purpose of purchasing the property, there are many factors that play a key role in choosing the right house for you. If you are looking for a long term hold for your family some key things to keep in mind is distance to amenities, looking into past statistics about the neighbourhood, crime rate, do some research and look up to see if there were any breaking news that occurred in that area. Speak with some of the locals and have them share their experiences of living in the area. If you plan on living in the property for over 20+ years, its important to know what kind of place you’ll be living in. If this property is mainly an investment choice and you are looking to rent it out and then sell after a couple of years you want to make sure there is room for appreciation in that neighbourhood. To be able to attract tenants, the location of the property needs to be in an ideal location with all amenities close by or even a subway or bus stop at walking distance to gain attraction from students.

Negotiating Power

First time home buyers usually don’t have the experience of negotiating a price down which is why it’s important to hire a professional real estate agent with experience of negotiating. The process of buying a house isn’t as simple as putting down an offer, getting accepted and then you get the house. There is a lot of back and forth that occurs between the buyer and seller to try and get the best price. The buyer is going to try their hardest to lower the asking price as much as possible. While the seller is hoping to make a little more than what was listed. As a first-time buyer, being able to negotiate your first home down from the asking price can greatly benefit you long-term financially and ease the entire buying process. First off, you’ll be saving thousands on your purchase which will then help lower your mortgage payments and increase your monthly budget. Next, you could negotiate to have a better closing date as you will have more time to finalize paperwork and you won’t have a mortgage overlap or must rent out a temporary place until you can move in.

A Desired Neighbourhood means Future Appreciation

As a first-time home buyer, you are not only buying into the property but the neighbourhood as well. It’s important to make sure the neighbourhood you buy into has a certain standard of living and everyone that lives in it do their part to take care of it. Both you and your real estate agent should find signs that show the neighbourhood has room to grow and the property has the potential to appreciate over the years. Here are some tips to help you get started when looking into neighbourhoods:

Low Crime

This seems like a given whenever buying a property. It’s important to make sure the surrounding area is considered safe to ensure you have no trouble of finding potential renters or even making sure your family is safe living in the neighbourhood. You can easily find stats of previous years by visiting the local police station. If crime rates are high, you’ll be able to get the property for a lot less but will have trouble finding potential renters or buyers in the future.

Rebuilding

If you see any homes getting rebuilt, inside and out, and older parts of the city are getting some work done then that is a sign of revitalization. It shows the city or town has room to improve and they are taking the necessary steps to improve the overall standard of living. By purchasing the property at this early stage of revitalization, you are maximizing your potential ROI with the property value only seen going up.

Improved Transit

Having a good transit system in place that connects neighbouring towns can help to raise home prices as more people will be inclined to move there out of convenience. You should check out if new bus routes or train stations are going to get added to build. If the property is located in proximity to the highway it also would attract the potential tenants or future buyers.

Projected Home Prices

Looking into forecasts of the neighbourhood and what the housing market would look like in the coming years is a great way to help decide whether you want to purchase a property in that neighbourhood. It helps to see how much the property has been selling for in the past and the potential for how much it can increase. Although, stats aren’t the only thing you should base your decision off. After seeing the property and being in the neighbourhood you should have a gut feeling on whether you want to move forward with the purchase. Trust your instincts and if you’ve done the due diligence, you should be confident in your decision.