How to Survive the Real Estate Cold Spell

Industry experts and market analysts seem to have their own versions of doomsday scenario for the real estate markets in Canada. All these tall tales of impending challenges for the country are getting us all riled-up. In addition to these issues, we are also getting conflicting signals in our foray into real estate markets.

This event is all too familiar. You see an amazing property that is attracting a lot of serious buyers and before you can even arrange for a meeting with the seller, the property is sold way above the asking price. One wonders how lucky this seller is when you see a nearby property which has been languishing on the selling block for months on end.

There is this unsettling chill that is hovering in most real estate markets in Canada. This has forced both buyers and sellers to reassess their positions and strategies. In a report that was recently released, Toronto Real Estate Board revealed that sales of properties across all segments have dropped by 29 percent when compared to the same period of last year.

On the other hand, average home prices declined by 3.5 percent from the same period last month. As home prices are expected to decline, stakeholders are digging deep in their trenches. Conditions in major markets remain volatile, and sales or buying tactics which worked so well last month may not yield the same results this time. For those who are in for the long haul, there are three things to remember – adjust, understand and capitalize.

Why are market conditions so volatile?

The writing on the wall is clear – home sellers who are not inclined to adjust their asking price will have problems moving their home for sale. On the other hand, those who know how the wind blows in real estate markets and react accordingly will have greater chances of getting ahead of the rest of the pack. We are just coming off from a frenzied phase where we saw depressed inventories in most segments in the market. This is coupled by high demand which placed an upward pressure on home prices. A higher number of buyers entered the market earlier than planned primarily because of a strong anticipation of an uptick in interest rates and the get-go for the harmonized sales tax.

However, the situation in the market made a complete turnaround, but these finally happened only when a near record number of homeowners have already put their property on the selling block. What followed was the feared glut in the market as buying frenzy finally lost steam and stakeholders took their positions by the sideline.

Move out of the market and try home rental

Home rentals seem to be the hottest pick of the times and we are seeing an increasing number of condo development projects. Notwithstanding the depressed condition, long-term prospects remain as bullish as ever. For the seasoned investor, this is still the best time for some long term investments. You have to remember that real estate markets will ultimately make a strong rebound. When this finally happens, the windfall gains from your principal residence will be shielded from taxes. This is definitely the best financial move for those who are looking at some real forced-savings.

What are the best buying options?

So what would be your best shot under the present market condition? You must look at scarce properties that have not gone through major repair or restoration. One must be aware of the fact that the level of gentrification rises when the market situation becomes tight. You must focus on buying opportunities in New Toronto, Nobleton and Hamilton.