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Are you thinking about selling your house? If so, you are probably hearing advice telling you to wait until the spring or until the market turns around or to beware of new Government policies which will make it harder. Deciding to sell is a big decision and there are a lot of factors to weigh.

What market factors should sellers review for before listing?

Don’t Rule out the Winter

Yes, the GTA real estate market does heat up in the spring but there is much more inventory. This spring and summer market is more competitive and you might even find that many of your neighbours also waited until the snow melted to list their home.

The winter will give you a smaller pool of buyers but those buyers will have fewer options. Be sure to invest the time or money to shovel your driveway and to winterproof your windows, if listing during the colder months.

The Current Market

The best indicator as to whether you should sell or not is the market. The issue is that the market is open to interpretation and can be difficult to forecast. Sellers need to look at the market locally and review recent sales of similar properties to determine if the circumstances lend themselves to a larger pool of buyers and a potential bidding war.

The best strategy is to speak with an agent who has sold multiple homes in your area within the last 12 months. They will have the best insight as to whether you should list or wait.

Policies and Interest Rates 

How the Federal, Provincial and Municipal Governments in addition to The Bank of Canada intervene in the housing market can have an enormous impact on the sale of your home. Whether it’s the affordable housing act or an interest rate increase or a stress test, measures are often put in place to cool or warm a market.

You need to be aware of the overall state of the market to make an informed choice about if the time is right to sell your house.

As spring approaches, both the weather and the housing market are poised to thaw. The question that buyers and sellers will be asking is whether last year’s stagnant spring market was an aberration or the beginning of a trend.

Early reports from 2018 seem to position the housing market as being more in-line with profitable years like 2013 and 2014. While it’s a bit early to know for sure, the signs do point to this spring being more productive and generating more sales.

Spring Impact on the Housing Market

Spring usually drives property sales due to an increase in inventory as more people list their homes. As well, it’s a popular time for buyers as the new supply offers more options for them to find a home that fits their budget and needs.

Supply can effectively drive the market and the spring typically sees an influx of listings that motivates buyers to get out and shop for their first or next home.

2017’s Stagnant Spring Market

Last spring, the average selling price dropped and there were fewer transactions. The biggest decline was experienced by detached houses. The slowdown could be attributed to the lack of supply or economic factors. In addition, affordability might have been an underlying reason.

The 2018 Spring Market

This year’s optimism could be related to the arrival of new Canadians, many of whom are situated in the GTA and looking to buy a permanent residence. This will drive the market as will the completion of several major development projects. Markets like the GTA tend to rebound due to the population and the constant demand.

It’s fair to assume that the bloated rental market and the high cost of rent might motivate renters to shift course, propelling the market to greater heights in 2018.

It might not be a season of crazy gains but it will wake the housing market from its hibernation and could gain steam through the summer and well into 2019.

The biggest takeaway is that buyers and sellers shouldn’t wait another year. They should start the process and monitor the market in the coming weeks. Contact us today to learn more about the GTA’s spring housing market and to discuss the steps to mortgage pre-approval.

Life changes and your personal finances tend to change with it. So much of your life is tied to your finances so when either a positive or negative shift occurs you need to re-evaluate your entire budget.

For borrowers who experience a change in their financial situation—new job, promotion, unemployed, come into money—they need to understand how they can adjust their home equity loans and mortgages or what strategies they can adopt to ensure their loan terms match their financial situation.

Redo your Budget

Once a change in your personal finances is a distinct possibility, sit down with your budget and review each expense against your new monthly income. This will give you an idea as to whether you need to pay less towards your loans per month or if you can pay more towards the principal amount of the loan.

Notify your Lenders

As soon as you know the details of your new financial situation, make an appointment to speak with your lender to discuss options and determine if you need to negotiate different terms. Depending on the lender (traditional or non-traditional) you could have options as a borrower. Nothing can change unless you initiate the conversation with your lender. In most cases, they are happy to work with you to ensure you can pay your loan or loans.

Your Mortgage and Loans

If you find yourself with more disposable income per month, then you could endeavor to pay off your loan faster. If you lose your job or find yourself in a situation where you need to support a dependent or pay for post-secondary education, then you might be able to negotiate new loan terms which will improve your cash flow. This applies for mortgages, home equity loans or a home equity line of credit. The goal should always be to pay the most towards principal but every situation is unique.

Lenders want you to be able to pay your loans so most will work with you to determine a course of action if your financial situation changes.

Buying a home in the GTA is a stressful process that can be rife with challenges and obstacles. From start to finish, the process can include saving for a down payment, reviewing lenders, filling out the extensive application, awaiting approval, dealing with insurance providers and then shopping for your dream house.

The Federal Government has added a stress test to the mix, complicating matters somewhat for already nervous borrowers.

Should the stress test be causing you stress? Or will it prove to be beneficial for borrowers, lenders and the GTA housing market?

The Stress Test

A stress test means that applicants now must prove they could withstand a substantially higher interest rate if this occurs. It’s a simple formula designed to protect borrowers and lenders form loan defaults and to stabilize the housing market.

Unfortunately, this has slowed or stopped the dream of homeownership for many Canadians. People must not only be pre-approved for a mortgage, their application must overcome an additional challenge in the form of a stress test.

The stress test isn’t all negative, though. There should be a lot of positive outcomes for homeowners.   

Benefit to Canadians

This regulation will help ensure that more Canadians are financially prepared for the responsibility of homeownership. The real benefit will come from a housing market with more pricing options and less bidding wars because the pool of buyers will be smaller and more qualified.

A healthier housing market with more entry points for Canadians will be invaluable to the economy and the financial wellbeing of homeowners. 

Protection for Borrowers and Lenders

The stress test should protect borrowers and lenders from defaults and situations that could financially harm either side. This was a necessary step to make sure that borrowers are vetted prior to approval and that lenders can provide a loan with some reassurance that market volatility will not be a hindrance.

Don’t let the stress test stress you out. Try viewing it through a positive lens as it can help all parties. Contact us to learn more or to start the mortgage pre-approval process.