It’s now common knowledge that Toronto and Vancouver are seller’s markets. This coupled with the influx of open houses in the summer months means bidding wars that result in some houses going for more than $300,000 over asking. It’s daunting for a first-time homebuyer, but many are still clambering to get into the market out of fear that prices will continue to climb until they will be priced out of the market.
For some intended buyers, it may be wise to bypass the entire summer and wait until fall to buy a house. This may reduce the chance of bidding wars, give you more time to save money and possibly skirt the peak of record-high prices in Vancouver and Toronto.
Wait out the Red-Hot Market
Home prices seem to be rising indefinitely, but according to a statement from the Canadian Real Estate Association earlier this year, they’ve “topped out.” Many pundits have called for a correction, and if they’re right, first time homebuyers may luck out by waiting out the market and parking their cash in other investments. However, there’s no guarantee that a correction is in the works, so speculators should be prepared to take on the risk of a continued increase in prices.
Fewer Bidding Wars
According to some agents and brokers, spring and summer are the hottest times to buy a home, with parents rushing to get settled before the start of a new school year. Come fall and winter, there may be fewer listings but also less competition. This can result in fewer bidding wars and ultimately lower selling prices. Talk to your homeowner friends and you’ll find at least a handful that will boast the financial merits of purchasing a home in late fall or in the winter.
Save, Save, Save for the Down Payment
This might sound obvious, but never underestimate the power of additional savings. For instance, many eager Canadians will rush into a home purchase without considering the effect of closing costs such as land transfer tax and legal fees. As such, they’re left ‘house poor’ and they struggle to pay these additional costs. Adding even a few more months of savings to your already healthy down payment may not enable you to increase your budget by much, but it will help you leave a buffer for closing costs and an emergency fund for unexpected expenses.
Can You Afford it?
It’s a jungle out there for the first-time homebuyer – or any homebuyer, for that matter. Beyond simply waiting out the market, it’s important to evaluate affordability. Will your current salary cover housing costs and other expenditures while allowing you to save? Will you be able to handle a rate increase? What other large purchases are necessary for you to make in the next little while that could take a chunk out of your bank account? These are questions you must ask yourself before taking the plunge and making a bid.