With the average home price in Toronto this year hovering around the $730,000 mark, it won’t encourage potential buyers to know that the market is still expected to increase another 8%. Although this is a far cry from last year’s 17% increase, it’s still a whopping 6% over what is considered a normal average annual increase for homes. This can partly be explained by a drop in new home construction. Last year saw a combined 20,000 new townhouses, detached and semi detached builds while in previous years that number was over 40,000. When availability is down, prices tend to soar.
High cost of housing combined with higher interest rates, low availability, and tightened mortgage rules by the banks may mean a growing population of renters for the near future.
All is not lost for those living in the Toronto area, however. There are several things new homeowners can look at to make buying a new home more feasible.
– Develop a relationship with a mortgage broker. These professionals can lead you to the best bank for your individual situation, and they weed through the applications so you don’t have to. They can also calculate your debt to equity ratio and give you information on, for example, the amount of debt you may have to pay off before qualifying, or how much down payment the bank will want to see. They can also come up with interesting ways for you to come up with that down payment without scrimping for a decade.
– Downsize! You may not want to hear it, but lowering your expectations may result in a good buy. In this market, it might be prudent to assume you’ll be doing some fix ups over the years instead of walking into a turnkey home that might saddle you with an overload of mortgage payments. Or take a good look at the space your family realistically needs; a basic home with a smaller footprint might mean you take possession instead of holding out for larger, less affordable accommodations.
– Think about renting out extra space. You may find you can qualify for that mortgage with a rental agreement in your back pocket. Rental income might give your income the boost it needs to qualify for the home you’ve got your eye on. You don’t need an entire basement suite either; an increasing number of homeowners are interviewing mature students or single professionals to rent a single room out of their homes.
– Take a look at surrounding areas for more affordable deals on housing. The expansion of Highway 407 might be your ticket to a home with a commute back into the Toronto area. Brampton in particular seems to be headed towards a more balanced market. Although prices hiked 19% last year, they’re expected to decline 2.5% in 2017, and homes are sitting longer than expected on the market meaning it’s a great place to keep your eyes peeled for a good buy.
If you are interested in learning more about housing costs in the Greater Toronto Area feel free to contact JW Professional and learn about houses for sale in Richmond Hill and Vaughan.
Article written by:
Smooth Air News