Buying VS Renting in the Toronto real estate market

We know that coming up with the downpayment for a property is tough, especially with the average price of a detached home in Toronto being $1,250,235 ($532,700 for a condo) and the new lending rules. However, here are some reasons why we think it makes sense to buy vs rent.

4 Ways Home Buyers Will Be Affected By The New Mortgage Rules

4 WAYS HOME BUYERS WILL BE AFFECTED BY THE NEW MORTGAGE RULES ON JANUARY 1, 2018

Feeling stressed about the new “stress test”? Here’s what you need to know…

As of January 1st, 2018, all home-buyers will be required to undergo a new “stress test” – regardless of your down payment amount.

This will not only reduce how much financing you qualify for on your next purchase, but it will also limit affordability on the refinance of your existing home. In fact, some scenarios show Canadians will be able to afford 20 percent less house once the new rules come into effect.

Securing your mortgage before the January 1st deadline could potentially save you tends of thousands of dollars.

-- From: www.msavvy.ca

THE QUESTION IS: HOW DO THE NEW RULES AFFECT YOU AND YOUR FINANCIAL GOALS?

While the industry is undergoing a massive shift, you always have options. We’re happy to walk you through them. In the meantime, here are four reasons you may want to take action before the new rules set in…

REASON #1: You’re a few months away from buying your first home.

For years now, you’ve been working hard to cut down on expenses and save up for that down payment. The fact is, you’re tired of paying someone else’s mortgage and you’re ready to start investing in your own financial future. If you’ve been thinking about purchasing a home in the coming year, you may be closer to your goal than you realize.

Wondering how much house you can afford? We break it down in the chart below. For more specific numbers, try using our savvy calculator to determine affordability based on your current income and budget.

Of course, these numbers are all about to change. As of January 1st, 2019, your maximum mortgage affordability will drop. We summarize the impact in our affordability chart here.

Wondering if this is the time to make the leap into home ownership? Fill out our online application to determine if now is the time to buy your first home.

 

REASON #2: You have some debt to pay off (or large expenses coming up).

Perhaps your kids are heading off to university, or you are looking to free up some extra cash to cover home renovation expenses. Refinancing allows you to tap into your home’s equity to pay off debt while taking advantage of lower interest rates. In fact, you can refinance up to 80% of your home’s value to pay off unsecured debts, renovation debt, or to simply access cash.

If your debt is weighing you down, this may be your best opportunity to make a change. Fill out our quick and easy online application form and we’ll help you determine if refinancing before the January 1st deadline is the right option for you.

Of course, these numbers are all about to change. As of January 1st, 2019, your maximum mortgage affordability will drop. We summarize the impact in our affordability chart here.

Wondering if this is the time to make the leap into home ownership? Fill out our online application to determine if now is the time to buy your first home.

 

REASON #3: You’re ready to upgrade.

As your family grows, so does your lifestyle. Right now, mortgage rates are at a historical low – we’re talking 1.99% for a variable five-year mortgage rate in Ontario. At this rate, a family buying a home for $500,000 with a $125,000 down payment could expect to have a monthly mortgage payment of $1,743.

But as of January 1st, that same buyer will have to undergo a stress test prior to qualifying in order to ensure they can afford to pay their mortgage at two percentage points higher (3.99%). This means they would have to show they can afford to pay a mortgage of $2,165 per month. That’s a difference of $422 a month – or $5,064 a year!

(Refer to “Chart B” above for the full breakdown of the impact on affordability). If you’ve been thinking about making a move, it may be in your best interest to secure a mortgage pre-approval before the new mortgage rules kick in.

 

REASON #4: You’re looking to make an investment purchase.

By now you know, it’s about to become tougher to qualify for a mortgage. No matter how you look at it, your purchasing power will decrease when the new rules come into effect January 1st.

If you’ve been considering financing an investment property, doing so before the deadline could mean the difference of owning up to 20 percent more house (as opposed to waiting until 2018 to purchase). Take a few minutes to fill out an online mortgage application today, and we’ll get back to you right away with the answers you’re looking for.

While the January 1st deadline is fast approaching, we want you to remember: it’s not just about the numbers. Even if you’re not in a position to purchase before the January 1st deadline, you still have options.

We’re here to discuss your short and long-term financial plan, so we can help you make the decisions that are right for your personal situation. And we promise we would never make a recommendation we wouldn’t suggest for our own family members. Get started by filling out an online mortgage application, and we’ll take it from there.

 

Have the paperwork ready? Let's get started. Click here to apply with our partners at Mortgage Savvy.

Toronto Real Estate Market Update - December 2017

Here are 8 key indicators I use to check on the health of the Toronto real estate market!
For more blog posts, click here.


Transcript:

Hi it's Kenneth Yim from Keller Williams Realty.  I know you get a lot of mixed headlines with what's happening in the Toronto real estate market, so I'm here to give you eight key indicators as to what's actually happening. Check it out!

So I have to tell you, this is only for 416.  If you need the numbers for 905, please feel free to give me a call.  

Okay, I know the number you are all curious about is the average price.  So here's everything since 1996, and as you can see, if you draw a regression line, you can see that we're slightly above average, but you know Toronto has been growing at a rapid pace and you know it's a wonderful place to be. We're still cheap compared to the rest of the world.

Here's actually what's happening, year over year. Now we'll zoom in a little bit, we'll see the five year average. And you can see it follows two little humps. So here we are. We're just about to finish the fall market, getting in to the winter months. Many of you ask, "when's the best time to sell"? Well, it's either spring or fall, that's the highest average price, and the lowest price is typically the summer when everyone is on vacation, and the winters when the holiday season hits.

So really, it's up to you.  I mean the average price is the highest in the spring and the fall, but as you will see in the next slide, you will have the most competition.  Similarly, if you are looking to buy at the lowest price point, you might not have a lot of options in the winter and the summer.

So let's get in to the next slide.  The number of units sold.  This shows the volume of activity, and again it follows two major humps, you'll see in the spring and in the fall you'll have the highest activity, and in the summer and the winter, everyone is on vacation and holidays, and there's less units sold.  So here we are now, and as you can see there's going to be a lot less activity in the coming months, but then again the average price goes a little bit lower.  So it might be an opportunity for buyers.

Now the third key indicator is the number of new listings in the market. As you can see, we have a lot more new listings on the market.  But it does follow the typical curve that we've seen before.

The fourth thing, let's match them up. So the ratio you see here is basically the amount of units sold compared to the number of new listings that come on to the market.  Right now we're just around 60% of [units sold] to new listings.  So if you look at the trend line, we're seeing slightly less sales, but overall the market is pretty healthy.

The number of active listings.  So that's what's currently listed in the market and hasn't been sold yet.  We'll see the trend line is moving a little bit up. In the beginning part of the year, you can see it's been pretty low, so things have been selling, fast, as you know.

Now if you take these numbers together, I think this is the most powerful slide, the months of inventory.  So basically, that means if nothing new were to come on to the market, how many months would it take to sell whatever we have active on the market?  So we take the number of active listings, divide that the number of sales every month.  So as you can see right now, the months of inventory is about 1.8 months.  So if nothing new were to come on the market, it would take about 1.8 months to sell everything that we have on the market.  It's actually not that bad.  Compare this to 2008 when we had the big tech bust, and when the U.S. economy collapsed.  So at the peak of the crash, we had almost 8 months of inventory. As you know, that blip didn't last long. Overall, we're still pretty healthy.

The days on market, tells us on average, how long it takes to sell a home in today's market.  And as you can see, the numbers are trending downwards. Although we're a little bit above the average line, it's still going down. We're looking right now of an average of about 21 days to sell your home in today's market.  And again, it follows the same seasonality curve. The spring and the fall is the hottest market, and the summer and the winter it's a little bit slower because people are on vacation. In this spring in 2017, you saw a crazy boom, everything was selling really fast.

So this last slide, the sold to ask ratio, will tell you if the market is typically trending to have bidding wars or not.  So if you're asking for $100.00, right now you're going to get $99.30.  In the early part of the year, it was actually approaching 112%! That's crazy! So right now we're a little bit under, I think it's a great time to get in, people are getting under what they're asking.  If you're looking to sell, well, maybe now is the perfect time to trade up. 

So as you can see, we're not going to head to a crash any time soon.  But we have less than a month before the government implements their new mortgage qualification rules. If you need to know how that's going to affect you, please give me a call.

Don't forget to subscribe to our YouTube channel, or give us a call and we'll give you a one-on-one market update with that's going to affect you.  Thanks for watching!

Five Minutes with Marlon Yee and Kenneth Yim

FIVE MINUTES WITH MARLON YEE
November 2017

Join us as we talk shop about Toronto real estate and some of our our investment success stories, and how you can get started if you have no money down.


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Marlon Yee

 

Call me at 647.299.8252 or email me at marlon@capitallendingcentre.com to get all your options!

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