How to Get Into the Market

2016 was a record year for real estate sales in the GTA. A shortage of listings along with a ready supply of eager buyers pushed the average sales price increase up over 17 percent. In a study of recent buyers by Ipsos, 51% indicated that they were first time buyers.



So how did they do it? After all, the press was (and still is) full of tales of bully bids, bidding wars with dozens of offers, and properties selling for hundreds of thousands of dollars above the asking price. How does a first time buyer compete? The answer is not that simple, but I will offer up a few suggestions for anyone hoping to get into the market in 2017.

First of all, are you sure this is the right time for you to buy? It may be hard for some to believe, but there really was a time not so long ago when properties sold with conditions in the offer, contingent on financing or a home inspection or something else. The market is cyclical and a buyers market will come around again. The biggest downside to buying in today’s frenzied, inflated market is that a market correction could leave you with a debt greater than the worth of your home, a terrible situation to be in. If you are confident that now is the right time to buy, and you have the perseverance to withstand the highs and lows of the house hunt, here are a few suggestions to help you get into the market.

Consider a ‘fixer upper.’ There is generally more demand for properties that are already done up nicely, so you might have better luck with a fixer upper. That said, a fixer upper isn’t for everyone. You need to be sure that what you’re buying is within your budget and comfort zone and that it has no serious underlying issues that will derail your plans. Some serious defects, such as electrical problems for example, are not readily visible. I would strongly urge you to retain a home inspector who can look at the property before you put in an offer.

Plan to share. In order to defray costs, some buyers are planning to share the space. The most common approaches to this are to rent out an income suite or have a roommate. Co-ownership (and co-habitation) is also an option; usually with family members, although the trend to co-ownership between non-related persons is growing.

Downsize your expectations. Keeping in mind that this purchase is a first step into the housing market, buyers might consider downsizing their preferred style of housing in order to make their budget go farther. Detached homes in Toronto are prohibitively expensive for most first time buyers as are most semi-detached, so consider whether a townhouse or apartment style will suit your needs in the immediate term.

Look further afield. Although demand in the suburbs is keeping pace with (if not outpacing) demand in the city core, in general housing is more affordable in the suburbs. And with recent and planned improvements in public transportation, it is possible to ride the train into the City in shorter time than it takes to drive.

Bargain hunt. Here’s how things usually go down in a sellers market. A property is listed for sale along with a date when offers are to be reviewed by the seller. The property sells either before (pre-emptive bid) or on the offer date. But some properties don’t sell for one reason or another. If you keep an eye on the properties that go a week or two without selling and the seller is motivated, there is a good chance you can make a deal.

My last piece of advice is to try to keep your head and not let emotions get in the way of a smart decision. Letting emotions rule the day could mean paying more than you’re comfortable with, or setting aside conditions that are meant to protect you. Work with a trusted REALTOR® and they will help you navigate through the purchase.