Is there such a thing as “cheap homes for sale” in Toronto? Yes! Well, sort of.
If you’re a buyer or an investor, you’re probably thinking that this latest market shift is a sign from above. Declining prices? Less competition? More conditions? Sign us up!
“Cheap real estate” isn’t really a term we can throw around when talking about Toronto homes for sale. In fact, September stats are showing that the average home price in the GTA is still around $1 million. However, since the market’s peak in February 2022, some areas of Toronto have seen prices soften up to 20%!
If you’re a buyer or an investor, now might be your golden opportunity.
Before I get started here, are you subscribed to my YouTube Channel? I’m always spilling the tea on the Toronto real estate market and giving my expert advice on topics you care about. Subscribe here!
There’s No Time Like the Present to Invest in Real Estate
With home prices in the GTA coming down in the double digits and interest rates still relatively low, this is the perfect time to get your foot in the market. For investors, it’s even more appealing because with higher interest rates come higher rents.
Read my post about why now is a good time for real estate investors right here!
But to really understand the benefit of buying a home in these market conditions, we have to go all the way back to the 1980s.
Picture it, you’re wearing leg warmers, your hair is crimped and teased, and you’re rocking that blue eyeshadow. You’ve got New Kids on the Block blasting on your walkman, and mortgage interest rates are at 18%.
You heard it right. Back in the 1980s and early 1990s, mortgage rates were sky-high. Our parent’s generation had to contend with home prices in the $160,000 range, with an almost 20% mortgage rate.
But, you know what’s interesting for this generation? Those homeowners who bought back in the day now have homes valued in the multi-million dollar range. That’s how “The Bank of Mom and Dad” began!
These homeowners made a smart decision, they found they could purchase a home in a range they could afford and could stay in the home for at least 5-7 years. What happened next? Interest rates went down and home values increased exponentially.
Which is likely the same thing that will happen here.
Want to learn more about timing the market? Read my post about it right here.
So now that we’ve got this out of the way, let’s talk about the different types of cheap homes you can find in Toronto. (Probably the reason you clicked on this article in the first place!)
Bank Owned Homes
You might know them by what American’s call them: Foreclosures. These homes, also known in Canada as “Power of Sales” are when the bank takes over ownership of a property because the homeowner was sadly unable to make their payments.
Power of Sales are a great option to find an affordable home in the market because, in most cases, the bank is simply looking to recoup what they have invested. Because of Canada’s strict lending laws, most properties will also already have 20% equity built up, which means Power of Sales can have some wiggle room on negotiations to get a better deal.
Are you thinking about buying a new home this year? Here are some helpful blogs to get you started:
- Our Top 8 Home Buyer FAQs
- To Buy First or Sell First–THAT is the Question
- Great Expectations: A Look at the Toronto Real Estate Market in 2022
In some cases, a home could be vacant because it was a rental property where the tenant moved out, or perhaps the homeowner needed to relocate or experienced a life change where they needed to leave quickly.
A vacant property is essentially a money drain. Mortgage payments, property taxes, insurance, and utilities all still need to be paid. So sellers of vacant homes are usually very motivated for a quick closing!
When someone passes away, the executor of their estate is charged with closing out all of the deceased person’s accounts and assets tied to the estate. For many, this includes real estate. The nice thing about an estate sale is that often the executor doesn’t have the same subjective, emotional investment tied to the value of the property.
Their job is to finalize everything and make sure the proceeds of the estate are properly allocated. Additionally, in many cases, these homes are also vacant and monthly costs are starting to pile up, which also motivates sellers to act quickly.
I never thought I would once again see the day when a listing in Toronto stays on the market for 60+ days, but here we are! While this would have absolutely never happened at the peak of the market, today we are seeing some properties stay on the market for 60-75 days. There are usually two reasons this happens:
- The seller is just testing out the waters and seeing what they could potentially get. Once the listing expires, they don’t bother relisting.
- The seller is working with a real estate agent who is not doing a very good job of informing their client about the market conditions.
Do any of these scenarios sound like you? Read my blog 4 Reasons Why Your Home Isn’t Selling here.
If we’re dealing with number two, you can expect the seller to feel tired and annoyed at keeping their home in showing-ready condition and re-organizing their lives to accommodate showings for more than two months.
However, this could be a great opportunity for you to make an offer. Sellers who have had their homes listed for a long time are more likely to respond to negotiations.
How Do I Find Cheap Toronto Home Listings?
Have I piqued your interest? Do you want to learn more about these four types of listings? Good news! I have a master list that currently has about 100 listings that fall into one of these four categories.
Do you want the list? Email me or text me today at 647-973-8392 and I’ll send it over!