May 6

Is Spring the Most Affordable Time to Buy a Home in Toronto?

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A pot of spring flowers

Every year, we see lots of headlines that talk about the "hot, spring season real estate market".

Buyers flock to the market in search of their dream home, and sellers are ready for this rush with their homes listed because they know that the spring season brings lots of opportunities to sell for the best price.

Yes, there’s a lot of sales activity in the spring, but if you’re a buyer, is spring really the best time to buy a home?

And by “best” I mean: getting the home that you need and want under your ideal personal and financial situation.

My answer is: it depends.

On what? A lot of things. Let’s dive in to exactly what I mean by this.

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What’s So Great About The Spring and Summer Market?

One of the main determining factors of a buyer's ability to become a homeowner is the price of a home. The biggest impact on home prices is supply and demand, and demand can be very seasonal.

Demand for homes is much higher in the spring and summer seasons because compared to the fall and winter seasons, you now have longer days and warmer weather which are more suitable for home shopping.

Another reason why demand increases in the spring is because families with children want to move before their kids go back to school. Considering that homes take 30-90 days to close after a signed contract, those buyers are flooding the market in early spring to make sure they’re settled in their new homes before the first day of school.

To meet this boost in demand, more homes are listed on the market during the spring and summer seasons. However, the demand is so significant that most of the available inventory is quickly consumed resulting in a more competitive and expensive market than other times in the year.

So if you’re a buyer looking to negotiate on price during the spring, you may not have much luck. Sellers have little desire to negotiate on price because they know that another full-price buyer is probably in line right behind you.

Can You Get a Better Deal at Other Times of the Year?

You might see some better deals in August and September because you still have a good selection of listings from sellers taking advantage of the good weather. However, competition has decreased at this time for a few reasons:

1) The families that were looking to move before the start of the school year are now out of the market having found a home or have missed the window.

2) Many families are on vacation or enjoying the last few weeks of summer.

For an even better deal, try shopping for a new home in November, December and January, when school is in session.

In fall and winter, less homes are on the market, and there are even fewer buyers. This is most likely due to the numerous holidays, busy family schedules, and difficult weather, all of which make moving unattractive.

The holiday season in December has very little inventory, but virtually no demand. As a result, the sellers will often need to lower their asking prices in order to sell their home during the winter. 

What if You Need to Buy Right Now?

We all love a deal, but in today’s current landscape, waiting to buy can work against you. The Toronto market has seen prices continually rising, and depending on the area you want to move into, finding a good deal no matter the season, will be difficult.

Here are some other factors to consider that might help you get your home now:

Interest Rates

Lower interest rates means lower monthly payments. And lower monthly payments will help you save money on the cost of paying off your mortgage.

Pay attention to the current and past interest rates because you don’t know where rates, prices or programs will be in the future.

Buyers who wait, run the risk of prices and rates rising and causing them to no longer qualify for the home and loan program that they were interested in.

2019 Outlook
The 2019 outlook anticipates that interest rates and home price will be on the rise which means that now may be the right time for you, rather than you waiting for the right season. 

Average Residential Sale Price


2017

2018

Year-over-year %

2019 Estimate

$822,572

$789,181

-4%

+2%

Your Financial Situation

Your financial situation determines your ability to afford a home. You will have to figure out if you have the income and credit score needed to qualify for a mortgage.

You will also have to determine if you have a sufficient down payment saved and whether you can you afford the other expenses that come with home ownership, from maintenance to property taxes.

The best time to buy a new home can also be when you’re in a favourable financial situation, like when:

  • You just finished paying off your student loans and have extra cash for a home.

  • You just received a big raise or bonus and you have more money for a good down payment.

  • You just got married, and between two spousal incomes, you have more cash for a new home purchase.

  • You just received a big family inheritance and you have the money to buy a home.

The more money you have, the less you will have to depend on a large mortgage loan and the more mortgage options are available to you.

Your Personal Situation

Your desired lifestyle is also a factor. You'll want to determine if you have the free time and the desire for home maintenance.

You’ll also need to know if something is driving you to buy a home sooner than later. Factors like moving for a new job or wanting a larger home, changes to your family or access to a new school.

If you’re a first-time buyer, you will need to consider your financial goals before you establish your house shopping timeline.

If you are on a tight budget and price is your number one consideration, start looking in fall with an eye on a January closing date.

If you’re a homeowner looking to upgrade, downsize, change neighbourhoods and have specific home features or locations, then house hunting in spring and summer when supply is high. This market will give you the most to choose from, even if the prices are not at their lowest.

If you are a buyer and you need to sell your current home before buying the next one, you may want to consider listing your current home in late spring in order to capitalize on the June rush. This will allow you to buy something soon after before the end of summer.

Conclusion

You can play the real estate market by waiting until January to buy a house, but the best time to buy is when you're ready.

And that could be when you have saved enough money for your down payment and closing costs, have good credit, and you’re ready for the commitment of homeownership.

If you have questions or comments about your best time to buy, leave me a message below, or book a free buyer's consultation with me.


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