How to prepare for the hot – and possibly extended – busy homebuying season

Ah, spring… when temperatures rise, flowers bloom and the real estate market explodes in a frenzy. And this year, we have the added complications of a lingering pandemic, interest rates on the rise, uncertainty due to the conflict in Europe, ongoing supply and demand issues, and growing concern over affordability.

Despite it all, some economists and other sources expect the Ontario economy to continue humming along, and that the usually hot spring housing market might extend into summer.

It’s a lot to digest. Who could blame prospective homebuyers if they were feeling a little unsure?

“With the volatile state of the world right now, which has been furthered by the suffering from the war overseas, rising inflation and economic levers being pulled by governments to increase interest rates, it leads many potential homebuyers to question if now is the time to buy a home,” Jesse Abrams, co-founder and CEO of Homewise, a Toronto-based mortgage advisory and brokerage firm, told NextHome.

“When volatility like this happens in the market, it’s often one of the best times to look for a home, because many others decide to wait on the sidelines,” he adds. “This often leads to lower competition and more inventory on the market to choose from. We are already starting to see signs of home prices flattening out, and new government policies. So, we could be looking at a very interesting time for potential homebuyers to enter the market and finally buy the home they have been dreaming of.”

To help make sense of such factors, and how buyers can best prepare, we’ve enlisted a select group of homebuying experts to share their insights.

Joseph Bozzo
Partner
Spectrum Realty Services Inc., Brokerage
Vaughan, Ont.
spectrumrealtyservices.com

Prepare and be flexible

A key place to start is to ensure you are living within your means and, be open to purchasing outside of your number one desired community.

When the Bank of Canada introduced the stress test a few years back, it did so to ensure purchasers had the means to withstand future interest rate hikes. We are now in a period where rate hikes are inevitable. The real estate market, be it pre-construction or resale within, will experience its ups and downs over time, but the trajectory will always continue to be on the upside. An influx of new immigrants, next-generation purchasers and limited supply will continue to sustain price points, and most likely cause upward pressure on prices.

Don’t get caught up in the hysteria. Ensure that the purchase you are prepared to make is sustainable, and within your financial means. Too many people are shooting for the max with our current historically low interest rates. Mortgage rates are on the rise, so remember to plan for that “what if” scenario.

It's important to be flexible as to where you wish to purchase and live. We all aspire to call The Annex, Leaside or The Kingsway our home, but Toronto and Hamilton area have so many other great neighbourhoods. We should always be open to consider other locations and not be locked into a specific area. If you can’t afford a townhome in Etobicoke, consider purchasing a larger condominium unit or a stacked townhome unit. If The Kingsway is out of your budget, consider other areas of Etobicoke, Brampton or Milton. Be flexible, and homeownership will be within your grasp.

Inventory levels, higher construction costs and supply chain issues will continue for the foreseeable future. Be prepared, get pre-qualified for a mortgage, and do your research on what new home developments are coming up. Contact a real estate professional and put them to work on your behalf. The spring-summer market promises to be very active, and it’s best to be fully prepared if homeownership is your goal.

The Hot List

Upcoming new home and condo launches

Neatt Condominiums
Condominium
Milton
By Neatt Communities
neattcommunities.com

Red Oaks
Detached luxury homes
Richmond Hill
By Trinity Point
trinitypoint.com

River Ridge
Detached luxury homes
Aurora
By Lindvest
lindvest.com

Tag
Townhomes
Newmarket
By Andrin Homes
andrinhomes.com

Mark Cohen
Managing Partner
TCS Marketing Systems
Toronto
tcsms.ca

Be ready to pull the trigger

The flurry of the GTA spring market has been well documented, and demand continues to outpace supply in 2022. Prices continue to rise, and interest rates are beginning to inch up, as well.

The past two years have been marred by uncertainty, but if you are looking to buy, now is the time. Buying a home is one of the biggest decisions a person will make, and there are a few important things to do in advance. Do your research, get your financing in place, and keep an open mind.

If you are determined to get into the market, you have to act fast. Research what you want in a home, what area and amenities are important to you, and know your financial position. While many turn to the “bank of mom and dad” for assistance in making their first home purchase, there are several options available to new-home buyers. It is important to be armed with all the information to make sure you are ready when it is time to sign.

Keep an open mind. If you want a detached home, consider searching in up-and-coming neighbourhoods. If you are looking for a condo with more space, maybe consider markets outside the core. If you’re looking for an investment property, look to transit corridors. I have been selling pre-construction real estate for more than 35 years, and I believe there is something for everyone. The key is to be ready to pull the trigger.

The Hot List

Upcoming new home and condo launches

Bronte Lakeside
Condominium
Oakville
By Alliance United
brontelakeside.ca

Debut Condos
Condominium
Barrie
By Silverberg Real Estate Inc.
debutcondos.com

Monza Condos
Condominium
Toronto
By The Benvenuto Group
monzacondo.com

Rossmont Green
Condominium
Whitby
By Star Residence
rossmont.ca

Debbie Cosic
Founder and CEO
In2ition Realty
Mississauga
in2ition.ca

Buy and wait – don’t wait to buy

We hear continually about new home supply lagging behind demand in the GTA and beyond in Ontario. Even with recent government initiatives to ease the situation, things will not change in the near future. Anyone thinking of getting into the new home market is wise to act now, while interest rates are still very low. Yes, prices have risen dramatically over the past decade, but people are still finding ways to buy.

We’re in the spring market now, which is typically a hot time in real estate. People are pulling out all the stops to afford down payments, including using some of their RRSP savings, co-purchasing and even receiving financial gifts from their parents to help. Keep an eye out for what we call up-and-coming neighbourhoods, meaning areas that are just now developing with amenities and transportation. Get in early if you can for the optimum prices.

Remember that along with increased immigration, the pandemic has fueled the market with people who held off from buying until everything is “normal” again. Reality has shown us that normal is changing, and people are getting used to a new way of life. If you are working from home and will continue to do so, you can look farther afield for your new home or condominium, where prices are likely to be lower. Lastly, be realistic about what you can afford, and remember that today’s condominium suites are beautifully designed to make use of every square foot. You may not need as big a space as you think.

My advice is to buy and wait – don’t wait to buy.

The Hot List

Upcoming new home and condo launches

The Deane Condos
Condominium
Oakville
By Rise Developments
thedeane.com

The Greenwich
Condominium
Oakville
By Branthaven
branthaven.com

Verde Living
Condominium
Kitchener
By JD Developments
verdeliving.ca

R. Scott Davie
President
Broker of Record
Davie Real Estate Inc.
davierealestateinc.com

Economic and political indicators

When preparing to buy a new home, timing is everything. With prices rising and elevated inflation, the simple answer is – buy as soon as you are ready. The deeper answer has to do with economic and political factors, and historical data.

Political uncertainty in Ukraine creates a pause in consumer confidence, and a rise in interest rates exacerbates that hesitation. We see a slowing of sales in the resale market, but not in the pre-construction market.

If we look back three, six or nine years, we see a reoccurring theme. Prospective purchasers believed the market was at a record high and couldn’t imagine it going any higher. But over each three-year period, we saw a six-figure increase in the price of new homes and condos.

The market is being driven by an imbalance between the number of new Canadians coming to Canada, and the amount of zoned land available to build. Before the current government took power, Canada welcomed 250,000 new Canadians every year. The GTA, where 60 per cent of the newly arriving Canadians typically call home, could not keep up with the demand for new homes and condos.

This imbalance driving supply and demand and pushing prices skyward is destined to become much stronger as the federal government plans to welcome more than 400,000 new Canadians in 2022, and in the following years.

Any pause in consumer confidence is destined to be short lived, because soon, the record number of new Canadians will overwhelm supply and drive prices out of reach for years to come.

The message is simple. Buy now, because in the near future, we will not be able to afford to buy the same size new home and condo in the same location.

The economic and political indicators are clear.

The Hot List

Upcoming new home and condo launches

Bristol Place
Condominium
Main and Queen, Brampton
By Solmar Development Corp.
solmar.ca

Bristol Place Tower 2
Condominium
Main and Queen, Brampton
By Solmar Development Corp.
solmar.ca

Oro, at Edge Towers
Condominium
Hurontario and Burnhamthorpe, Mississauga
By Solmar Development Corp.
solmar.ca

Michael Klassen
Broker of Record & Partner
Eleven Eleven Realty Services
Toronto
1111realty.ca

Be prepared, act quickly

My advice for prospective new-home buyers is to be prepared to act quickly when a great opportunity arises. In this hot market, there’s not much time to hem and haw over whether to buy. Being prepared means many things. First, know how much you can afford. If you are a first-time buyer, get pre-approved for a mortgage. If you have a property to sell, look realistically at what you may get for that and plan appropriately. You need an idea of what you can comfortably afford.

Of course, location is paramount when you do your new home or condo shopping. Once you’ve narrowed down where and the type of home you want, the key is to get access to whatever inventory developers are offering. The market is very competitive these days, so this is where an agent or broker can help. Remember that developers and builders dictate what inventory they will release for what prices, as well as deposit structure. Comparing is great, as long as you don’t take too much time. If 20 people have an eye on a specific home or suite, remember, only one will get it.

Doing your homework ahead of time is more important now than ever before. That includes initiating follow-up with the builder or your listing brokerage, to make sure you’re still top of mind when new inventory launches. Realize that even with slight mortgage rate increases, today’s rates are still historically low. Buy now, and lock into these rates and today’s prices before we see them rise again.

The Hot List

Upcoming new home and condo launches

Lackner Ridge Condominiums
Midrise condominium
Kitchener
By Reid’s Heritage Homes
reidsheritagehomes.com

Splendour
Freehold townhomes, semis and detached homes
Niagara Falls
By Mountainview Building Group
mountainview.com

St. Clair West
Midrise Condominium
St. Clair Avenue, Toronto
By Kultura Development
livekultura.com

Barbara Lawlor
CEO
Baker Real Estate Inc.
Toronto
baker-re.com

Pull out all the stops

My advice for prospective new-home buyers is no different now from what it has been for years: Buy new and buy now. Even though interest rates have inched up, they are still historically low. There is no telling how long these attractive rates will last. The best approach is to go into home shopping prepared.

Knowing where you stand financially is the first consideration. Get pre-approved for a mortgage, and then start your shopping. Spring is typically a hot season for real estate, and many experts are saying this year will be busier than ever. It is important to do your homework and jump at the opportunity to buy when you find something that fits your needs and pocketbook.

Keep an open mind, too. Many of today’s condominium suites, for example, “live” much larger than their square footage, because there is no wasted space in the designs. If a single-family home is out of your price range for now, getting into the market sooner rather than later is more important than waiting. Prices will not go down in the foreseeable future, and once you own a home or condo, equity begins to build. This opens a world of opportunity for your future housing needs.

Watch for upcoming product launches of interest and get yourself on registration lists right away. Pull out all the stops; check into government programs to help with your down payment. You can become a homeowner – it will be one of the best steps you’ll ever take.

The Hot List

Upcoming new home and condo launches

Celeste Condominiums
Condominium
Richmond and George Streets, Toronto
By Alterra and Diamond Corp.
celeste.ca

M.City 5
Condominium
Mississauga
By Rogers Real Estate Development and Urban Capital
mcitycondos.com

The Dawes
Condominium
Dawes Road, Danforth Village, Toronto
By Marlin Spring
thedawes.com

Hersh Litvack
Broker of Record
Hersh Realty Group Inc. Brokerage
Toronto
hersh.ca

Buy now, then look back

What may seem expensive today may turn out to be the ultimate housing bargain. As we emerge from the pandemic, housing prices will continue to rise through 2022, and the initial hike in interest rates will have little or no effect on slowing the market.

Further increases in price will be eminent, as the industry deals with new legislation requiring builders to allocate a certain percentage of their developments to affordable housing initiatives. These costs will inevitably be passed on to consumers, increasing the overall price per sq. ft. throughout the GTA. It’s called Inclusionary Zoning.

This spring, purchasers should take advantage of the very low mortgage rates, ranging from seven-year fixed for 2.97 per cent, to variable rates of 1.24 per cent.

There is a truth I have come to grips with in the real estate industry. It doesn’t matter when you buy real estate. The day you buy it, it always seems expensive. It’s only when you look back that you realize how well you did.

The Hot List

Upcoming new home and condo launches

Blue Mountain Condos
Collingwood
Condominium
By Freed Developments
freeddevelopments.com

Deerhurst Condos
Condominium
Huntsville
By Freed Developments
freeddevelopments.com

Muskoka Bay
Detached homes
Gravenhurst
By Freed Developments
freeddevelopments.com

Muskoka Bay Villas
Villas
Gravenhurst
By Freed Developments
freeddevelopments.com

The Fifth at Charisma
Condominium
Vaughan
By Greenpark Group
greenparkgroup.ca

Christopher Markovic
CEO
PMA Brethour
Markham, Ont.
pmabrethour.com

Preparation and informed purchasing

With all areas of the country experiencing heated market conditions in recent months, it can be very easy to get caught up in the frenzy if ill-prepared. To avoid costly missteps, it is important to step back and do your homework before heading out to buy your brand-new home.

Here are some quick and easy steps to take to make sure your new homebuying experience is a memorable one.

Before you begin to narrow your target communities and make virtual sales appointments, step back and reflect. Make a list of the need to haves versus the nice to haves. Think about what style home works for you, and create a journal of features you really want in your new home.

Now is the time to reach out to your bank and have a meaningful conversation about your budget and homebuying goals. More and more developers and homebuilders are requiring a firm mortgage approval and commitment when you sign your agreement (or shortly after). This means that a pre-approval letter from your mortgage broker may no longer be enough to secure your purchase. Start the conversation early and get assigned to a mortgage representative who will work with you as a partner during your home search. Once you have made the decision, get your bank to provide you with a firm adjudicated approval right away. In this time of rising interest rates, you may even be able to negotiate rates to protect yourself from increases.

Remember, not only does the home have to be within your budget, but you are also buying into the new neighbourhood. Do your research: Are there schools already in the area? Is it close by to family and area activities? Does the community offer the amenities you need and want? Consider all these factors so you can avoid outgrowing your new home too fast.

The Hot List

Upcoming new home and condo launches

Countrylane
Towns and singles
Whitby
By Andrin Homes
andrinhomes.com

Homeward Hills
Singles and townhomes
Oshawa
By Sorbara Group of Companies
sorbara.com

Mirabella Condos
Condominium
Toronto
By Mirabella Development Corp.
mirabellacondos.ca

S2 Private Residences
Condominium
Mississauga
By United Lands
s2condos.ca