Timing the market vs. time IN the market

Property prices in the GTA keep breaking record after record. March saw the average price in the GTA hit a previously unheard-of high of almost $1.1M. So the question of the moment has become “should I wait until prices calm down?”

The answer to that is no - here are some factors to consider:

If you look at the performance of the GTA market over the last 75 or even 100 years, you’ll see that while there have been fluctuations, those ups and downs have consistently trended upwards over the years. So people who have held onto their properties or have lived in them for a while have always done well with passive appreciation.

Try to think long term. It’s not about timing the market - it’s time In the market that really counts. Real estate is a long-term play.

Looking back 5 years.

In 2016, the market was setting records, and there was a lot of chatter about bubbles. I had a number of clients who decided to hold off buying until prices “cooled down.” And when the government brought in the stress test and the foreign buyers’ tax, some people paused because they thought this would be the moment they were waiting for and prices would fall. But just like what happened with COVID in 2020, things chilled for a bit (and maybe some sellers panicked) but prices stayed stable for the most part and then started climbing again.

And now, here we are in 2021. When we look back at 2016 prices, they don’t look so bad anymore.

Ultimately, it doesn't matter what cycle you buy into.

If you buy and hold, you can be pretty confident you'll do well in the long term. I always tell my clients to try to buy a place they can stay in for at least 5 years. All you have to do is look at the data on average home prices in the GTA over the last 20 years:

2000: $243,255

2005: $335,907

2010: $431,262

2015: $622,116

2020: $929,617

2021: $1M+

Yes, there were ups and downs in there for sure. But you can't argue with that upward curve.

If you buy now you start building equity right away. The longer you wait the more expensive it will likely be. It doesn't have to be your dream home right away: you can always level up once your property appreciates enough or you are in a different income bracket. Even a tiny studio will appreciate and build you equity. In a few years, you can use that equity to buy something a little bigger and better – and work your way towards the forever home you have in mind.

Paying today’s prices is scary, no argument there. But house prices have always been scary. I know people who paid $600K for a semi in Roncesvalles in 2006 and all their friends told them they’d completely overpaid. And we all know who that turned out for them.

There’s a reason for that confidence.

Toronto and the GTA keep growing, and people will always want to live here for a number of reasons. For one, this is where the jobs are (and while work from home is here to stay, experts are saying most people don't want 100% remote). This is also where a significant percentage of new Canadians settle. It’s where students come to learn. And in normal times, it's a city full of cool culture and great dining and exciting things to do. So when things reopen, and workers, immigrants and students come back to the city and drive up demand even more, there's a good chance we'll be looking back at today's prices and saying “what a deal that was.”

Still wondering if this is the right time to buy – for you?

Get in touch with Sean to talk about the right strategy for buying or investing in this market.