Are you planning a real estate move soon? Do you have Stranger Things-style cuckoo clocks showing up in your dreams? Wondering if you can time the market? Can you hear the clock ticking away? Is it possible to time the market? Should you even try?
In this post, we’re sharing everything you need to know about timing the Toronto real estate market.
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Timing Isn’t Everything
So here’s the tea, timing the market is extremely hard. Picture this. You’re on a round trip to an unknown destination. You won’t know when you’re headed back home until you’ve turned around. You have no way of predicting what’s going to happen until it’s too late.
The real estate market is pretty much the same idea. You never know when you’ve hit the bottom until it starts to go back up, just like you never know when you’ve reached the top until it starts to go down.
This fact alone makes “timing the market” an incredibly difficult and misleading strategy.
The Toronto real estate market can be fickle! But if you’re working with the right agent, it’s easy peasy. Thinking about making a move in Toronto this year? Read some of our latest blogs to get started:
- Dishing on Your Top Toronto Home Selling FAQs
- Spilling the Tea on Your Top 8 Home Buying FAQs
- A Look at the Toronto Real Estate Market Today
The 4 Phases of the Real Estate Cycle
Traditionally, real estate follows a roughly 18-year cycle that encompasses 4 major phases. If you remember watching the series finale of Friends when it came out, you have likely lived through all of the cycles. They are:
Recovery – Typically happens after a recession, buyers are usually feeling a bit uneasy and tired of the general economic outlook. Rentals are remaining stagnant and sellers might be selling properties below market value in order to help themselves financially.
Expansion – With an improving economy and strong job growth, we see big demand for housing. The public is gaining confidence and things generally seem to be on the up and up.
Hyper Supply – A frenzy of construction and market activity means that supply can finally catch up to demand. However, there’s always a point of no return, and supply will eventually outweigh demand. This could happen because of a sudden shift in the economy (*cough* like interest rate increases).
Recession – You know the drill. During the recession phase of real estate, we typically see supply exceeding demand, rental prices going down, and property owners selling at low prices. But don’t worry, it won’t last forever. In time, the cycle will start again with recovery.
The real thing to know here is that it’s pretty hard to know which phase we’re in until we’ve already transitioned to the next one.
Just like they say there are two certains in life: death and taxes. We like to say there are two certains in real estate:
- Prices will always go up over time.
- There will always be speculation that we are living in a recession or on the brink of a recession
I’m always happy to dish out some real estate advice you can trust. Here are a few blogs to help you on your home buying or selling journey:
- 4 Reasons Why Your Home Isn’t Selling
- Should You Hire Your BFF to Sell Your Home?
- To Buy First or Sell First, That is the Question
So, Should I Time Things?
Literally everyone wants to wait for prices to drop before buying a home. We all want the market to cool, we all want low-interest rates. But what have we noticed over the years? It almost never happens.
Do you really want to spend your life waiting for “unprecedented times” to make your real estate move? That’s not a good strategy and let me tell you why.
Picture this, it’s March 2020, you’re washing all your groceries, you have a sourdough starter on the windowsill, and you can’t wait to binge-watch Tiger King on Netflix. We’re at the start of the pandemic, and you’re noticing that the market is up. You sell your home and decide to move into a rental short-term, because the market just HAS to come down eventually right?
Well, it’s over 2 years later and even with the sale of your home, increased interest rates and exponentially higher prices might price you out of the market. Your plan to act fast and time the market has failed.
It’s really hard to know what’s going to happen until it happens. The market can zig when we expect it to zag or take even longer to shift than we anticipate.
Is now a good time for real estate investing? Take a closer look on our blog here.
What About the News and Market Signs?
Of course it’s important to pay attention to market signs. Read the news, listen to what economists say, but just know that at the very best, their opinions are just educated guesses. I’ve been in real estate for 15 years now and people have been saying there’s going to be a massive market correction coming any time now. And guess what, I’m still waiting.
My personal experience has shown that corrections are typically small and come and go quickly.
If You’re Planning to Buy a Home in Toronto Now
Buying a home to live in is more than just making a financial decision. It’s more than an investment. It’s your home. Your life! It makes sense to act right away and get into the market.
Start paying down a mortgage rather than paying rent towards someone else’s! My advice:
- Find something you can comfortably afford.
- Find something you can see yourself living in for the next 5-7 years.
We have a saying at our brokerage, “don’t wait to buy real estate, buy real estate and wait.” It rings true in almost every situation.
It’s like school kids playing double dutch at recess. You can wait on the side for the perfect time to jump in, but eventually, the bell is going to ring and recess is over. Don’t lose out!
If you have any burning real estate questions or you’d like some advice on getting into the Toronto housing market, give me a call or text me at 647-973-8392. I’m always happy to chat!
