"How come prices keep going up?"
Several factors play into this question, but it all boils down to economics 101, "SUPPLY AND DEMAND".
Firstly, the big change for everyone, the pandemic. People who were quarantined at home wanted larger spaces, especially something with a yard as they couldn't go anywhere. Furthermore, most jobs were converted to work at home and continue to have that work at home component. Many people decided from owning or renting small spaces in the downtown cores, to buying in the outskirts or slightly away where a bigger space was equivalent to the cost or cheaper than the downtown core. Supply of housing has also been affected as people who were thinking of selling have decided to hold off because the fear of spreading Covid.
Secondly, interest rates dropped and more people were qualified to buy and spend more. Many families were able to either move up to a bigger place, purchase an investment property, go from renting to buying, or even getting refinanced money from family to finally qualify to buy their first home.
Thirdly, immigration capacity has increased causing for more people to come into Canada, and making housing more in demand. According to Canada Immigration, in 2021 they planned to welcome 401,000 permanent residents in Canada, with 411,000 in 2022, and 421,000 in 2023. Just imagine if only half those people make it to the GTA, and assuming most family units on average have 3 people coming, that's almost 70,000 homes for these new families alone for the GTA.
Lastly, "FEAR OF MISSING OUT" or commonly known by many as FOMO buying. Many people have rushed to buy homes, or forced themselves towards some sort of home ownership because the fear of not being able with how the real estate market has continued to take off.
"Is it a good time to buy?"
There is no good or bad time, and you can never time the market. Past history has shown us that buying real estate and holding it will eventually bring you more money than you paid for it. However, everyone's financial goals and risks are different.
"How can I afford a home in this market?"
Depending on your needs and your capabilities, I would first look at speaking to someone who does mortgages and see how much you can qualify to buy for. Then I would suggest speaking to a financial planner and accountant to work on a budget and see if buying now, a year, 3 years, or 5 years from now is good. Then speak to your real estate broker to determine if we can find what you are looking for. Consider this one thing, you may not be able to get your dream/forever home, but getting into the market is a stepping stone towards that.
"What do you recommend I do now?"
Personally, I have told all my buying clients to observe what happens in the next two quarters. Unless you are in a dire need of a place to live and you don't want to rent, we should hold off buying or investing. We are still in the middle of a pandemic and things are continously changing. Economies have not recovered, businesses are still struggling, supply chains having problems, and inflation is at an all time high.
If you are looking to sell your property without buying something, go for it! You're going to get top dollar.
If you are looking to downsize, I would suggest buying the smaller place first and then selling. As mentioned, supply is limited, finding your next home may or may not be possible based on the situation. After acquiring the new property, it will not take long for you to sell your home.
If you have any questions, concerns, or comments don't hesitate to drop us an email and let us TAKE YOU HOME.