If you live in the GTA, or Canada, or even the U.S., you've likely noticed how booming the real estate market in Toronto has been over the last 2 years. With figures like a 22% rise in housing prices year over year, it's hard to gain some sanity amongst all the headlines. But what if you're still renting and aren't sure if you can or want to get into the market? What's  a realistic downpayment? Does purchasing a property even make sense at this stage and what should you be aware of? If you do nothing else, start with these 5 steps...

1 - Contact a Mortgage Broker

Before getting out into the world of available properties, it's important to get an understanding of what you can afford? A mortgage broker is one of the best ways to determine what your current level of income and credit rating can buy you in the market. The Glenn Team work with a fantastic group of brokers at MorCan Direct. Marcus Tzaferis and his team can secure excellent loans with rates that compete with, or undercut the banks and often in a fraction of the time. Like anything else, doing some comparison can help too, so if you've got the time to meet with someone at a bank or other brokerage, you should take that time. 

2 - Contact a Realtor

This may seem an obvious or self-serving piece of advice, but with a slew of new online options available to today's buyer, speaking with a real and experienced professional - in person - can answer a lot of questions much faster than google and message boards can. A great Realtor should be able to look at your budget and want list and give you honest advice about where you can live, in what type of property and what expectations you should have about those options. 

3 - Get Out There

How does a 900 square foot condo compare to one that's only 500 square feet? Do you really need 2 washrooms? What does a South facing view offer that a North doesn't? How does a 16 foot frontage compare to a 20 foot frontage? With the sheer diversity of housing types and styles, not to mention the less exciting but equally important mechanical distinctions; ie. gas vs. electric, LED vs. halogen, marble vs. caesarstone counters etc. it's important to start to see what's out there. Though the prices will certainly vary over time, the products and the particularities will remain relatively consistent and if you haven't been face to face with at least a few, how will you know when you find the one or not? Sure, you may have seen some great photos, but let me tell you from experience that photos can lie! Wide angle lenses do wonders in small spaces so do yourself a favour and get out there to see what the property is really all about.

4 - Do Your Own Research

Regardless of the qualifications of any professional you're dealing with, your individual style and preferences may not gel perfectly with your Realtor's so it's always a good idea to do some research in your own time. Which neighbourhoods might you prefer (if you're budget allows you to make that choice)? Are there particular amenities you want nearby? Do you know the difference between Georgian or Victorian? Do you even care what it looks like or just that it has a garage or a skylight in the bathroom?

If you have friends or family who've recently purchased, they may be able to give you some of their own advice about the buying process or might have a horror story to share that better informs your choices. The point being that nobody knows what you like or dislike as much as you and the more you know or are aware of, the better the position you'll be in when seeing properties, or asking questions of your Realtor.

5 - Be Prepared to Compromise

So you've just seen your 10th property and are convinced that this is the one... with the exception of that horrible bathroom! Don't fret! Though every design and real estate show will have you believe that houses all come renovated and ready to move in, there was once a time when people purchased property as a long term investment and were prepared to make concessions for the things they could fix over time. Though the pace of the current market can work well for a property-flipper, a sound foundation and (as boring as it may seem) well installed plumbing and electrical can be just as important as the lighting fixtures. And with styles changing as quickly as the seasons, will today's modern masterpiece be as popular in 5 years when you're considering moving into something else? Plans change and so do markets, and if you're not prepared to make some compromises, you could miss out on a fantastic property.

FINAL THOUGHTS

Remember that like a good book, any property is more than just what's on the surface, so put a great team together, get prepared with as much research as possible, get out there and finally achieve that dream of becoming a home owner!

If you've got questions, we'd love to help answer them! Contact Susan or Jeremy today. 416-925-9191

Creativity is alive and well in Toronto. As house prices have continued to increase in Toronto and the GTA we've seen first time home buyers get more creative in finding ways to make it affordable to buy their first home. Often the down payment required and not the monthly payments are the stumbling block for first time buyers.

Many first time home buyers are getting cash gifts from their parents to put towards the down payment for their first house. Parents are giving their kids their inheritance now instead of waiting. This allows them to establish a foothold in the market and helps them begin to build up equity in a property that can later to be used to leverage a second home in the future.

Other first time buyers are purchasing a home with a basement apartment with the intent of renting it. This option could be used in addition to receiving a gift or as a way to create more income and help pay for the mortgage. This can also apply to rooms within the house, if you're a people person and don't mind sharing space. Any home buyers considering this option should be aware of fire codes and the legalities of such an undertaking. It also wise to read up on the responsibilities of a landlord as defined in the Residential Tenancies Act. 

Another creative idea is to look for duplexes or triplexes with friends in a similar financial position. If the house is set up properly, one person or family can live on the first floor and the others on the second floor and if available, third floor. Of course the basement is always an option depending on it's state and the apartment strategy could work in this case as well. This way, the residents can share the down payment in order to get into the market.

Finally, financial vehicles, such as RRSPs can be a good source of a down payment as a loan to yourself. Of course you have to pay this back in order to avoid paying income tax, but the idea is that your income will increase over time, so that you will be able to pay the loan back at a later date.

Necessity is the mother of invention and we're seeing plenty of inventive ideas. If you've got some ideas for getting creative in this tight Toronto Real Estate market, we'd love to hear yours.

Susan Glenn