Can You Time The Market?
Everyone knows the first rule of investing: buy low, sell high. When it comes to real estate, wouldn’t it be fantastic if you could sell your home while the market was up and then buy as soon as it dipped? If you’re a first time home buyer and the ‘sell’ part isn’t an option yet, you might be waiting on the sidelines for the ‘inevitable’ crash so you can grab a property for much cheaper than now.
A couple new reports out this week illustrate why waiting for that ‘sure thing’ might actually cost you more.
For the last several years, reporters and industry experts have been announcing the coming crash for real estate prices in Toronto. Toronto has the fastest developing condo market in North America, many of which are bought by foreign investors and not even lived in.
With skyrocketing prices and landlords struggling to fill units, a crash is all but inevitable.
At least until this month, when realtors noticed something completely unexpected was happening – bidding wars.
That’s right – this “soon to crash” market is witnessing competitive bidding wars during what is traditionally a slow time of year, after years of hearing about the bubble it’s in.
Is this phenomenon specific to Toronto? What lessons should we take from this?
A recent survey, discussed by the Toronto Star found that about 30 percent of home purchases over the next two years will be from first time buyers. Perhaps those who were forced to save up a bit longer because of the more restrictive lending rules last year finally have enough to buy.
Or perhaps it’s as, according to the National Post, that more and more young professionals want to live in a city, forcing Toronto’s population to increase faster than the surrounding suburbs for the first time in over 20 years.
What Does This Mean For You?
If you’ve been paying attention to experts and waiting for the big crash in real estate prices, you might be very disappointed. Agents and other experts have done a complete 180 with regards to how they’re thinking about the market (in Toronto anyway).
Could you or did you predict how the new mortgage lending regulations would affect buyers? Did you study demographic patterns to notice the urban-prioritized trend of those who are forcing companies to move their offices back into the city?
The fact is, timing the market will most likely backfire. You could have spent the last few years renting and biding your time, only to look up and realize you could have purchased a few years ago and started building equity already.
For real estate, buy when YOU’RE ready. Make sure you really are ready to buy a home, and find one you can afford. Let the market take care of itself.