The Real Estate Market is so hot and active at the moment. I have not seen this much activity in the last 15-20 years of my real estate career. Even though we are going through a pandemic, something that has not been seen in a 100 years and has caused the economy to shutter and forced businesses to close left, right and center, the real estate market is still booming.
With an uncertain future, the travel, tourism, retail and restaurant industry and most of the major pillars of the economy are in a very sorry state. Governments are supporting them with numerous subsidies including rent, wage, no interest loans and many others. So the question is: How is the real estate market booming in the GTA during these unprecedented times. The following is what you need to know and what are the dos and don’ts at this time.
Some quick suggestions and warnings:
• Consult an experienced and mature Realtor .
• First get your mortgage approval in place - Approval not a pre-approval
• Do not rely on loan money, line of credit or any other borrowed money for your down payment or deposit
• Do not speculate
• If you decide to buy a property, plan to keep it for a minimum of 5 years. Do not plan on a quick flip and expect to make a profit.
• Do not indulge in bidding wars and multiple offers. You will end up paying more and at the time of closing, appraisal can be an issue. If the market settles you will end up with 50 to 100 thousand in negative equity.
• If you are planning to buy, wait for late spring or early summer. More inventory will come on the market and prices will settle.
• If you are investor, look towards the Condo market. The Resale Condo market is struggling and currently is down. One can easily make a good return on an investment in the resale of a condo. Once Covid is gone and a thing of the past, things will return to normal and demand for Condos will be back.
• First time home buyers should also consider the Resale Condo Market, as the competition and prices will be lower than normal. Mortgages should be easier to get approved, as prices will be low and locations will be more favorable.
• For investment properties, make sure your down payment is higher - like 30% or 40% as mortgages will be tougher and harder to get in the next few years.
• Sell any property you have owned for a couple of years and has reached its maximum in terms of price gain. This step will give you leverage to close other forthcoming investment properties easier.
• Do not Re-finance current properties to invest in future projects.
• Keep a cushion of 4-6 month rental revenue for any investment property, just in case the property can’t be rented right away.
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