Yes, mortgage rates are making it difficult to afford the home of your dreams. But if you can make the financials work, now is the time to pounce on a property.

1) Average GTA home prices are now 12-18% lower vs. the March 2022 peak (depending on home type).

2) Buyer negotiating power has increased dramatically.

3) There is FAR less competition. 

4) Buyers will have the luxury of time to thoughtfully approach their purchase. 

1) Prices are lower

Looking at the 30 year average price chart below, you can see that the average TRREB area (most of the GTA) price trend (yellow line) has only decreased 4 times. 1995-1997, 2008-2009, 2018-2019 and 2022 to present.  Seeing a pattern? These moments of price decreases tend not to last very long.  Let’s take a look at how much each home type has decreased in price since March 2022 peak prices (as of November 2023): 

Average Detached home → -17.4%

Average Semi-detached home → -16.3%

Average Condo Townhouse → -18.0%

Average Condo Apartment → -12.3% 

The bottom line - date the rate, marry the price. If you can make the numbers work today, you will be acquiring a property at a depressed price.  Down the road you can refinance the associated mortgage debt (hopefully at a lower rate) while enjoying more total price appreciation of your property along the way. 

2) Buyer negotiating power has increased dramatically

• Average days on market have increased from 9 days in March 2022 to 25 days in November 2023.  

• Sales-to-new-listings ratio has plummeted from 60% a year ago, to 40% today (IE only 4 sales are happening each month for every 10 new properties coming to market). 

• The number of home sales in the TRREB area has decreased dramatically in 2023 vs. 2022 and 2021. As of November 2023 there have been -13% fewer home sales year-to-date vs. last year, and when compared to November 2021, -46% fewer sales. In short, buyers are sitting on the sidelines now more than ever.

• I suspect that the number of distressed sellers is increasing quickly, I’m seeing more and more listings coming to market that were purchased during the height of the market frenzy in early 2022.

What does all of this mean? Buyers have leverage. Sellers are going weeks without receiving any offers, and are continuing to see listing competition pile-up around them. They will be thrilled to get ANY offer, so don’t be afraid to make one. If there was a time to be aggressive, it is now.

3) There is FAR less competition.

Remember the experience of competing with 5, maybe 10 other offers and feeling compelled to remove important conditions like a home inspection or financing? Remember having to make offers at the absolute maximum of your budget range just to have a hope of beating out your competition? For now, these dynamics are but a distant memory.  Take advantage of it while it lasts, because it won’t be this quiet for long.  

Many qualified buyers are sitting on the sidelines right now waiting for a sign to make them more comfortable to make a purchase without feeling like prices will fall even further (such as the next news cycle about interest rates, prices starting to rise again, etc.). I totally understand this mentality however the downside of this is that once you get that additional piece of information to give you the “green light” you’re looking for, so does everyone else! As the great Warren Buffet once said “...be greedy when others are fearful.”

4) You will have the luxury of time to thoughtfully approach your purchase with minimal time pressure and the ability to complete important due diligence. 

Want to go on a second showing before making an offer?  No problem!  Want to take a day or two to think about it? Go for it.  Heck, want to make your offer conditional on the sale of your current property? You might even get away with that. And as mentioned above you can feel free to include other important conditions and clauses to protect yourself as much as possible, without facing much objection from the seller.

In summary, if you’re able to make the financials work, it’s an excellent time to be a buyer. Even if it means purchasing something smaller now just to get into the market at today’s depressed prices. You’ll almost certainly accumulate a good deal of equity over the next few years, and then you can refinance down the road or trade-up to something bigger and better leveraging your new-found equity.

Reach out anytime to discuss how best to maximize your specific situation in this current market environment.

-Steve