Buying a home is like having children — there may never be a “right” time.
And just like having kids, deciding to buy a home is often more emotionally than financially based, although in today's Toronto market, finances might be dictating much more than usual these days. If you’re prepared, however, to do your homework, stick to a plan and budget and stay put for a while, this might be your time.
According to TD Economics, in its most recent provincial forecast in December 2016, Ontario is in for a gradual downshift that will let some steam out of the market over the next couple of years, with a 1.5 per cent to 2 per cent rate of expansion. Ontario and B.C. will “still occupy the upper end of the growth leaderboard in 2017-18,” says the report, and other fundamentals, such as manufacturing and exports, remain “growth-supportive.”
Here are four points to ponder:
1. Can I afford this?
This is the biggest question you should ask before a major purchase. Be realistic. If you’re already struggling to pay your bills, you’re not ready. With new stress-test rules in place for mortgages, you’ll have to be able to comfortably cover your mortgage assuming at least a 10 per cent down payment and interest rates that are slightly higher than what you may actually qualify for. Home ownership comes with more expenses than just mortgage and taxes. Are you ready for utilities, insurance, Homeowners Association fees, maintenance and the like?
2. Will I stay rooted?
How long do you plan to stay? If you’re going to stay put for a few years — say, three to five — you might be ready. Transaction and moving costs can be significant, and if you’ve got job, marriage, school or similar life-changing prospects on the horizon in a year or so, it may be better to stick it out where you are for now.
3. Is it all good in the ’hood?
Can you afford a place in a “good” neighbourhood? Most of us can’t afford our dream home the first (or even second) time out — so you may not be nesting in the heart of Yorkville anytime soon — but you should be looking in neighbourhoods that make sense.
Proximity to the TTC is a good sign of sustained value, whether you’re looking for a place to hang your hat, rental income, or long-term capital gains. A small place in a good neighbourhood is a better investment than an expansive space in the middle of nowhere. Look for a variety of amenities, including parks, shops and libraries within walking distance. Check out the school district even if you don’t have kids — good schools help properties hold their value. Check out the architecture. No matter how beat-up it is right now, a predominance of one housing style, say Victorian, will likely eventually pick up as a new generation of buyers falls in love with older characteristics.
4. Is the area blooming?
Watch for an investment in infrastructure, such as a new LRT station or community centre. Watch the neighbours — is there a lot of renovating going on? It can be hard to gauge whether a slightly dilapidated neighbourhood is on its way up or on its way down, so watch for on-trend businesses (independent coffee shops, artisan bakeries, whole foods markets) moving in. If a neighbourhood had one particular problem and that problem has gone away (such as a smelly manufacturing facility that has closed), it may be ripe for a renaissance. Research the average number of days on the market for listings; when that number is going down, house prices are likely going up. Call the local police and find out about crime statistics too. No neighbourhood is crime-free, but you want to make sure your prospective neighbourhood is trending in the right direction.
If you’ve got your eye on market fundamentals, are stable financially, and can afford a neighbourhood with a future, this might just be your time to buy.
