Does the Toronto Real Estate Market Stress You Out?

March 31, 2022 | Buying a Home

If the real estate market does not stress you out, that can only mean one thing: You own a home with no mortgage and no intention of moving.

If this isn’t you, the market is probably stressing you out. The antidote to anxiety is to “name it to tame it.” Let’s go through various scenarios, so you can feel secure in your buying or selling decisions, no matter who you are.

Scenario: You’re a homeowner who needs to renew your mortgage: ACK! Mortgage rates are going up. Your monthly payments may also be rising.

Antidote: Call your mortgage broker or banker right now, even if your renewal isn’t up for some time. Start strategizing. My mortgage term is up in September, but I have already locked in a pre-approval for that renewal, so I know that my mortgage rate renewal is OK even as rates increase. I was able to do this because I could take advantage of an early renewal provision in my mortgage. If you don’t have a provision like that, or if your renewal is still a ways off, find out what the penalty for breaking your mortgage early would be and decide if it makes financial sense to break early and renew at a lower rate before the rates get much higher.

➤ For more information, refer to this interview with mortgage broker Leanne Shearer on the blog: https://www.kimkehoe.com/leanne-shearer-mortgage-broker/

Scenario: You’re a buyer, and you feel that prices are rising so quickly, if you don’t buy immediately, you’ll be priced out of the market. This is a prevalent problem for buyers, and it has become more acute this year. This is one of the reasons that the bank of Canada is raising interest rates. In theory, higher interest rates mean lower house prices. It is a delicate balance because you also want to make sure that you can pay your monthly bills, regardless of your purchase price. A lower house price with a higher interest rate may still yield high monthly payments.

Antidote: Take the plunge and buy something. The most important solution is to make sure you’re on the property ladder. So, giving up on finding your perfect home, you might need to compromise location or the kind of house you buy, but your money will be growing at the same rate as the housing market. You can buy your forever home with the equity you built in your first home.

➤ Want to learn more about buying? Take a look at these posts:

Scenario: You’re a seller, and the offers you’ve received on the property are less than what you were hoping for. It is easy to expect that your house will sell significantly more than your neighbour’s recently-sold house in markets that continue to rise.

Antidote: Recognize that interest rates and rising gas prices make some buyers re-think their budgets. Take a deep breath and think about why you are selling your home and your financial goals. Don’t hold yourself and your home hostage, hoping for a very high selling price that would have been unthinkably high even four months ago. If you need to sell your home, understand that the offers coming in prove where the market is.

➤ Want to learn more about selling? Take a look at these posts:

Ok, now a note to everyone: Your best resources are your real estate agent and mortgage broker. Find a real estate agent who has a lot of experience and specifically works in the area where you are trying to buy or sell. This market is rising quickly and has some unpredictability, and you want an agent who knows how these nuances affect your particular neighbourhood or city. If a real estate agent promises to “take all your stress away,” as I have often seen advertised, that is a red flag. There is no way to take your stress away. But, we can reduce your stress by giving you excellent and calm advice.

Good luck out there! And stay safe.

As always, Stay safe
Robyn VanderVennen