Prohibitively high real estate prices in Toronto and Etobicoke have put homeownership out of reach for a vital demographic: young first-time buyers. Even if they could manage the monthly carrying costs, coming up with a down payment is a nearly impossible feat. This current market is highly challenging and unlike anything we have seen for a very long time, if ever.
However, with challenges come opportunities. For the right buyer in a rare and prosperous financial situation, now could be the best time to get a foothold on the property ladder.
Who Faces Challenges in This Market?
Young buyers aren’t the only ones who find these current conditions a struggle. The impact of first-time buyers being shut out is felt all over the market.
Some potential buyers are turning to smaller cities and towns far from the GTA, where housing prices are relatively accessible. Others have given up on buying altogether and are either staying at home longer or renting.
Many homeowners hoping to sell are also frustrated, as their listings remain on the market much longer than they ever anticipated. This is especially true for those selling smaller properties and starter homes.
Even investors are offloading some properties as high interest rates make it more difficult to generate positive cash flow.
As a result of all of these factors, the number of condos and townhouses available for sale has skyrocketed. For the first time in a long time, there is a category of inventory where there are too many listings and not enough buyers.
The real estate market is unpredictable, but that doesn’t mean you can’t succeed within it. The posts below will help you be a more informed buyer or seller:
- What Is Going On In The Etobicoke Real Estate Market Today?
- Can You Still Buy A House In Etobicoke For Under $1 Million?
- Know the Real Estate Cycles and Hack the Market
Who Wins in the Current Market?
The rare first-time buyer who qualifies for financing and has the money for a down payment is one of the big winners in this market. With the surplus of condos and townhouses available, prices are also down at the moment.
Another demographic that benefits from current conditions is the move-up buyer. With more listings and less competition, they are in a far better position than they were even just a year ago.
Existing homeowners with a significant equity share also do not struggle with high prices like a first-time buyer would.
If the market changes and prices rise, their existing home will also command more. If prices fall, the difference between what their house sells for and what they pay for the new property is less.
However, downsizers and empty-nesters just might be the biggest winner of all in this new reality, especially if their mortgage is paid in full. They can cash out their equity by selling at a high price and buying a smaller place outright. Since they are not financing, interest rates are no barrier for them, and they can also take advantage of the influx of condos on the market.
What It Means for Sellers
The lack of first-time buyers is having an impact across the board, but especially on entry-level homes. If you are trying to sell a small bungalow, condo, or townhouse, you will need a strategic plan. Even better, you should have guidance from a local real estate team who knows how to navigate a tough market.
- A compelling price point is necessary. If you had a home evaluation a few months ago, you need to reassess as everything has changed since then. You cannot afford to base your strategy on old information. Your Realtor® can help you maximize the value of your home by analyzing the most current data on what is selling in your neighbourhood.
- Presentation is still everything. The more spacious and modern your home appears, the more of an edge you will have over competing sellers.
- An aggressive outreach campaign may be the most critical piece of the puzzle. Your marketing materials must obtain maximum exposure to a broad market far beyond the dwindling number of first-time buyers.
To a large extent, your selling strategy will depend on the type of property you are selling. Buyer hesitation across the board is making it challenging for almost everyone. However, those offering a larger family home will have it easier in some ways; fewer listings are available, plus you are generally targeting a more affluent demographic less impacted by price.
Are you thinking about beginning the hunt for a new home? The resources below will help you stay on track:
- How To Make Your Home Purchase More Affordable
- How To Tell If Your Dream Home Is A Money Pit Or A Worthwhile Investment
- What Compromises to Make When Buying A Home
What It Means for Buyers
Fewer first-time buyers in the market can be a double-edged sword for those looking to downsize or upsize. On the one hand, you have less competition. You are less likely to contend with a bidding war, and you can take longer to determine whether a home is right for you.
However, though there are fewer buyers, the ones you’re up against are more seasoned. Though competition at this level happens less often, it can be more heated. If the house you have your eye on is particularly desirable or is in a highly sought-after neighbourhood, you could have your work cut out for you.
Competition for the best listings will consist of equity-backed buyers who may have the resources to contend with multiple offers. Plus, you may also find yourself up against those rare first-time buyers who are relatively affluent, some who are skipping the entry-level step and going straight for their forever homes.
These are interesting times we live in. However, real estate remains a valuable investment despite these short-term fluctuations. It gives you the joy and peace of mind of having a place to call home and can lead to greater equity and financial stability in the long term.
Do you have questions about how to successfully navigate today’s real estate market in Etobicoke? We are happy to help you achieve your goals, whatever they may be. Reach out today to contact@thompsonsells.com or call 416-450-5900 for more information.
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