Housing Market in Toronto on the Eye of Buyer

There are many houses on the sale list in Toronto at the moment. However, this is not abnormal. On the one hand hundreds of thousands are out of job and making their living with government money, on the other hand, a handful of people were judging the buyers market at the time of crisis. It was said that at the beginning of the pandemic real state market was little shaky and tilting towards the buyers side. But the reality is completely different. There are people who want to turn their property in the liquid since the future of the real state market is unpredictable. 

I was hunting a bungalow in Scarborough area even before pandemic. There were some of the listed properties in my community. I was keeping eyes on them to know the market. Those properties were listed after a few days as sold and with the big tag, sold hundred to two hundred over asking price. It was scary. The property was already listed above the market value. If  somebody pays on top of it an extra dollars, there something unusual going on in the market. If the house is listed for eight hundred thousand, my expectation as a buyers somewhere in the same listed price, may be ten to fifteen thousand higher than the listed according to the market trend. But when the houses are sold like this how can we afford house in Toronto. 

 Last Saturday I went to see dozens of houses with a realtor a friend of mine, Laxman Subedi. Most of the houses were freshly renovated not the most valuable stuffs but the cosmetic one.  Those bungalows were spacious, but most of them have two bathrooms, one for the basement and another for the top floor. The good thing with these bungalows is they are really spacious and the the basement apartment was really nice. But the demerits of them the plumbing and the heating system was still old fashioned. 

 There was a house as per our needs in a peaceful location. School was next to the house and it has good rating. As I was researching about the communities and other amenities, my realtor called me next morning and asked if I was ready for the offer. It was quick decision as we were still collecting information about the location and school. When we finally decided to put an offer, the house was already sold in over asking price. I was thinking of putting eight hundred thousand offer as the house was listed only for seven hundred seventy nine. It was sold more than hundred thousand over asking. Then when somebody asks me how about buying house when the market is cooling off, I get really pissed off. One should try the market before getting some judgement. 

As we have been already in the boat, we have to sail it no matter how many days we go through this process. Everyday we check the posting for sale. There were more than hundreds of houses listed everyday for sale. Not all the houses meet our expectation. When we like the house, we can not meet their expectation. Their expectation was much more than not only our budget, but way above the property value. One day we visited a bungalow near Kennedy and Eglington. The house was listed for $899K. It was freshly renovated. One of the Nepali friends offered $970K, but he lost the deal. Next day, the same house was relisted for 1.5 million. What the hell? The housing market in Toronto is really crazy.nobody can predict the market with the ongoing flow of the market price. 

 The sellers have also very dangerous psychology. If somebody put house on sale in the neighborhood, they wait and see the sold price. If they see the sold price of the similar house in the neighborhood skyrocketing, they go crazy. Next day you can see dozens on the list. It is just like a gambling. When one sees another winning the big, everyone rush to bet to get the big. When one buyer is not ration and goes for the over asking, it hampers the market price. And the genuine buyers become the victim of tycoons who hike the price in the market and get benefited by the other houses that they actually own. Such buyers have multiple houses in the market, therefore they create a trap by hiking the price. 

My another experience is the magic of renovation. Most of the sellers wants to sell their houses without renovation. They often list their house in moderate price. Those houses are sold as it is, and the offer is not unexpectedly high. But those houses which are newly renovated, they are listed in higher prices and also sold quickly in over asking deal. There are professional house flippers. they buy the house in the cheaper price which needs the renovation. As they buy in the cheaper price, they redesign the floor, change the kitchen counter top, add extra washroom, make some cheap cosmetic changes to make it look better and sell in the high price. Lets say, they buy the house below two hundred of the market value, put roughly fifty to one hundred thousand on the renovation and sell over nine hundred thousand. They make 100K to 200K within the few months. 

There are some wise investors on the real state. They buy the property in the cheaper price, do some light renovations with a few pennies and rent. They cover the mortgage with the rental income and grow their investment over time. The real state market in Toronto rarely goes down. 

But it is really hard to buy property for the first time home buyers like me. We have to have twenty percent down payment at hand. Then have to work a lot hard work for the mortgage. Sometime we have to put offer without condition which create the risk of loosing the deposit. If put the condition of house inspection and mortgage, we might not get the deal due to the competition of  the buyers. If there are five offers for the same house in a slight variation, the deal always goes to the clean offer. Nobody wants to go through the period of uncertainty. So it is always difficult to the novice buyers to buy the property in the big cities like Toronto. However, mega cities like Edmonton is always good for the first time buyers. They can buy the house with five percentage of down payment and there is no complex process of mortgage since the houses are really cheap in comparison of the big cities like Toronto and Vancouver. 

Why investors are really after the housing market of the big cities like Toronto and Vancouver? Any investors always look for the growth of their investment first. If they buy the house in the cities like Toronto, they can hold the properties a couple of years by renting the property. Since Toronto is the first place to land for the immigrants, there is always someone waiting to rent. If anyone wants to rent the property on the reasonable price, there is no chance to keep the investment on hold. 

 Everyone is now talking about the real state. They are both experts and novice buyers. Some people say that the effect of pandemic not yet come. So buyers should wait for a while to get the house in their price. But there other people who claim that the real state market never goes down in Canada. Others claim that the US marker will definitely affect the Canadian real state. Many experts are also claiming that when the government stop giving money to the public, then those who lost the job will be rushing to sell their property. But my personal view on it very different than others. I don't think  any of the home owners will sell their house below the recent value of the market as soon as the government stops giving them a couple of hundred dollars. They have their plan and many of them have already paid off the ,mortgage too. Even if they have no money to pay the mortgage at the moment, they definitely manage to pay with the help of the friends or the line of credits. They know that the economic recession in Canada does not last longer.

One of my friends asked me if I was interested to invest on the pre-construction  projects out of GTA. It was not a bad idea. But those properties will not make a profit in comparison to the properties in the GTA. I have seen most of the houses are sold within a week of listing. When you want to sell the property anytime you want, it is always wise to invest to the area where you can sell in the short time. Places like Scarborough, North York, Brampton, Mississauga are always hot zone for the real state market. The price of the houses always go up. Once you invest on such property, you never have to look back. But situations like pandemic are always possible. Nobody knows the future. We can wish for the best.