Is There a Good Time to Buy?

Like having children, there is no perfect time to buy real estate. (Or maybe there is, but without the gift of clairvoyance, none of us are likely to recognize it.) If you’ve got time to sit on a property and ride out market fluctuations, it certainly makes the decision easier. The days of quick flips and selling on assignment are likely over, at least for now. Whether you’re buying a primary residence or a property for investment purposes, the only thing you can do is be educated, don’t get in over your head financially, and make the leap.

Toronto’s housing market has been hot for a long time, and every “expert” in the industry has a different take on what the foreseeable future (an oxymoron if ever there was one) will bring, so it’s natural to start to question the market’s sustainability. Media pundits do it all the time; even if there’s nothing new to say, they have to keep producing copy. It all certainly muddies the waters.

So — is this a good time to buy? It’s not even the right question. The best question you can ask is, Is this a good time for me to buy? It’s not a question anyone can answer for you, but here are some things to think about while you figure it out for yourself.

Location, location, location: It’s been said a million times, but it’s still true. Whether you’re working towards a long-term capital gain or counting on rental income, the neighbourhood in which the home is located is the single biggest factor in sustained value. If you’re new to the game, or this home purchase represents the most substantial part of your investment strategy, stick to the sure things: Yorkville, the Beach, the Annex and the like. Anything with a subway stop next door. Buy small if you have to, and hang on. Getting into a downtrodden area that looks like it’s headed for gentrification is a risk that may pay off — or may not.

There is no such thing as a sure bet when it comes to picking a neighbourhood, but there are some things to watch for. Neighbourhoods with prices just slightly above the median appeal to buyers moving up the property ladder — those buying their second or third homes — and tend to hold their value. Look for varied amenities in the neighbourhood itself. Parks, shops, and libraries within walking distance are good signs. Even if you don’t have kids, check out the school district; good schools are always attractive to family buyers.

Call the local police and ask about crime statistics in the neighbourhood. No place is 100% crime-free, but you don’t want an area whose crime stats are trending in the wrong direction. If crime stats are on the way down, it may be that the neighbourhood is in fact on the brink of catching on, but public perception may take a while to catch up. That makes it a good time to buy there.

Don’t believe everything you hear: Even if friends tell you the schools are great and crime rates are low, do the research. Find out what the property taxes are; disproportionately high taxes can mean the town or city is mismanaged. Visit your intended neighbourhood day and night, weekday and weekend, for a real feel of what life there is like. Look around. Who else lives in the neighbourhood? Do they look like you? I don’t mean in a creepy, judgmental way, but if you’re looking down at your Jimmy Choos and find yourself surrounded by Birkenstocks, it may not be the right fit. Are the neighbours all over 50 and you’ve yet to hit 25? Don’t be afraid to stop people or knock on doors and ask them what they think of the neighbourhood. Most of them are happy to talk and will tell you the truth, at least as they see it.

Drive, she said: Don’t just drive through the neighbourhood once because you’re already in love with a certain house. Don’t take a friend’s word that’s only 45 minutes to work, either. Check out the commute for yourself, and in rush hour. Remember that traffic is lighter in the summer, with school out, people on vacation, and the weather (at least for the most part) predictably mild. February is going to come. Even take into account what kind of car you drive, and what it costs to fill the tank. Behavioural scientists say commuting a long way is one of the worst things you can do for your happiness. Swedish scientists even quantified it — couples with one partner who commutes more than 45 minutes to work are 40% more likely to divorce. Consider a smaller home closer to work.

Good things come to those who wait: According to Toronto Life, population projections in Toronto mean the need for nearly 100,000 rental units to meet demand by 2031. If it’s an investment property you’re thinking about, and you have the time to hang onto your investment, even if the rental income just covers your cost of ownership, it can still be a worthwhile investment. Make sure you do —and understand — the math.

Don’t over-upgrade: If you’re buying as an investment, keep the upgrades to an absolute minimum. These days, most builders’ standard finishes are perfectly fine, and all the upgrades in the world won’t significantly increase your rental income. If you’re planning to live there, remember that you never want to own the most expensive home on the street. Just because you’re willing to pay top dollar for bamboo flooring lathed by celestial virgins doesn’t mean you’ll find a buyer who feels the same way in five years.

Nothing’s perfect: Unless you have Oprah money and build it yourself, you will never find the perfect home in the perfect location with everything you want at a price you can afford. Be prepared to compromise.

The bottom line is simple enough. If you’re emotionally ready and can afford to ride out market fluctuations, now is as good a time as any.