Even though all of the world’s problems right now seem to sit on top of orange-coloured shoulders, I’m here to say that the enemy for a home buyer right now is NOT the Donald. Or even Putin, even though he’s a pretty bad dude.
Here are the “domestic threats” that keep home buyers awake at night:
Builders
How dare you charge $950,000 for a basic product that I can find on the resale market for $825,000! That is not right.
What’s worse is the extra closing costs, and risks of the home not being worth that much on closing. What happens in that case? Well, YOU make up the difference in cash, above and beyond your downpayment. More about the pros and cons of buying from a builder in this article.
And the scary thing is there are LINEUPS of people that are actually paying these prices. Some of them are even sleeping over outside of the sales centre.
My faith in humanity is restored when I hear about people walking away. But many don’t, and they commit to these unbelievably high prices.
I’ve even heard that some local builders are allowing deposits to be put on CREDIT CARDS, and they are preventing buyers from having their lawyers review the agreements. These are massive red flags, and you should proceed with caution in 2017 with any builder.
Time
The average home price in the Greater Toronto Area was $622,121 for 2015, and $729,922 in 2016 (proof here). If you take the difference and divide by 365, the AVERAGE home increased by $295 A DAY.
That’s $2,065 a week.
That’s $8,850 a month.
In order to keep pace with that kind of appreciation, you would need to be earning more than $200,000, because of taxes and life expenses. And most people don’t fall into that category.
So when is the best time to buy a home right now? Unfortunately the answer is YESTERDAY.
How long will it last? Nobody knows. But many economists and smart people believe there’s no end in sight for 2017. If you’re planning on buying a home, then each HOUR you wait costs $12.29, 24 hours a day.
That’s scary.
Bad Agents
This is a graph showing the distribution of sales for agents in the Toronto Real Estate Board. It’s very unsettling, and it’s something that doesn’t get nearly enough press.
And in a hot market like this, you can swing your arms in all directions and find SOMEONE who is in the process of getting their real estate license. Agents are EVERYWHERE, and it’s only getting worse.
But back to the numbers…
If you look close enough, you’ll notice a few things:
- The number of agents selling more than 100 homes a year is less than 50 out of 46,000 agents. Yes, our team is in that category, and has been for a number of years.
- Almost 20% of agents sold ZERO homes in the last twelve months.
- Almost 75% of agents sold LESS THAN SIX homes in the last twelve months. We have agents on our team that sell six homes in a MONTH.
And in such a strong market, you need an agent who will point out reasons NOT to buy the home.
Someone who isn’t dependent on YOUR purchase for their next mortgage payment.
Someone who can give you honest, reliable advice based on your needs and what’s important to you.
Someone who does this work full-time, with a long track record of delighted clients.
So the next time you’re considering hiring an agent, ask them how many people they have helped. If you think it’s expensive to hire a professional, try hiring an amateur.
What to do about it…
You have choices. You can do nothing, and maybe that’s the right thing to do. But my guiding principle around real estate is that NOBODY has ever regretting buying property 20 years later. Think carefully about that.
Waiting is also an option. But if this market shifts and cools down, the most likely cause will be raising interest rates. Which means prices may fall, but your monthly costs will likely stay the same or possibly increase.
If you buy a home, what I can promise you is that we’ll take good care of you. We will treat you like family, and always keep your interests first. If that’s the kind of experience you’re looking for, then reach out to us by email or phone. And please pass this along to anybody that would find it helpful.
