Missed Real Estate market bottom? Where to get good deals now?

Submitted by Jasmina on Wed, 2009-06-24 08:17.

If you are one of the buyers who was waiting for home prices to come down more, than you have missed the housing market bottom in the GTA. But don't worry, you can still find great deals in the areas & home types that depreciated more during this downturn.

Toronto neighbourhoods to look at

Spring 2009 Canada Mortgage and Housing Corporation (CMHC) "Housing Market Outlook for Greater Toronto Area" report reveals:

  • Sub-regional analyses show that more households will be interested in buying in the relatively more affordable municipalities on the urban fringe, such as Scarborough or Etobicoke.
  • Over the past few years, York Region has dominated low-rise new home construction activity (single-detached, semis and rows) in the GTA. Many of these new homes will be reaching the completion and occupancy stages this year, leading more of the area’s buyers to list their existing homes in order to facilitate their move up in the market. The growing pace of new listing in this region should result in slightly more moderate market conditions compared to other areas in the GTA.

Another report "Royal LePage Q1 2009 House Price Survey" points to sub-market divergences, by comparing prices between the first quarter of 2008 and the first quarter of 2009. If you take a look at attached Toronto Area charts you will see that:

  • The home price drop was highest in Markham. Standard Two-storey houses cost 14% less than in the same period last year!
  • My Richmond Hill didn't have any price changes across the three housing types surveyed.
  • Homes in Midtown & North Toronto are more expensive, but they cost 15.4% & 11% less than in the same period last year.

Property types to look for

The slowdown in home buying activity and price declines was widespread across all housing types in the Greater Toronto Area. However, the rates of price moderation varied. CMHC report explains:

  • Difficult economic and financial environment leads to less demand for big-ticket luxury items, leading to fewer homebuyers able or willing to spend the extra dollar for high-end, single-detached homes. As a result, home sales and prices in this segment saw a more dramatic drop.
  • Ownership demand will continue to shift towards less expensive home types and sizes, such as condominium apartments, town homes, or even smaller single-detached homes. The compositional shift towards greater sales of lower priced homes vis-à-vis high-end homes will weigh down average selling prices for the GTA.

That's why Trade-up Buyers are in the best possible situation now:

  • Higher-end homes tend to lose value much faster than lower-end homes during a correction, but high-end homes also tend to appreciate more during appreciating market, so you would win on both ends.
  • Mortgage rates are extremely low and the only way they can go is up.
  • If you are a condo owner Trade-up will protect you from Condo Fees increase when Repair & Maintenance companies start charging Harmonized Sales Tax (HST).
  • And you will pay 8% less in Real Estate transaction fees if you make a move before July 1, 2010 when HST kicks in!
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