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Real Estate Investments

Dip in Real Estate Means Now is the Time to Buy Investment Property

The Toronto Real Estate Board’s recent Market Watch report held some promising revelations for anybody looking to invest in the city’s real estate market. November saw Toronto-area homes continue to fall in price, coming down 8.8% since May of this year. This recent drop is being reported as the most significant price decline in a six-month period since 2000. If you’ve been waiting to purchase a Toronto investment property, the time to act is now.

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What Qualifies as Flipping Real Estate for the Canada Revenue Agency?

In October 2016 the Canada Revenue Agency (CRA) introduced new changes to its real estate sector reporting requirements. The biggest change was the CRA’s addressing of those who were non-compliant in the real estate sector, focusing on those who don’t correctly report their goods and services, unreported capital gains, unreported income, and most importantly for real estate investors – property flipping.

Here’s what you need to know to stay in the CRA’s good graces in the wake of these added guidelines.

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Tips for Renting Your Toronto Property in a “Hot” Market

 

Great news for Toronto real estate investors – the Toronto housing market continues to thrive in its current “hot” state. With a vacancy rate hovering around just one percent over the last year and increasing rental prices, Toronto landlords have the luxury of being able to prosper in the hot market and to shop around for ideal tenants while also retaining them for longer periods of time.

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What to Remember When Purchasing Your First Toronto Investment Property

Making the jump into the world of real estate investing is something that takes time and patience. Making the wrong decision can cost you dearly, and might see you get stuck with a property you aren’t prepared to handle. In order to avoid things like unexpected costs, major renovations, or just plain bad luck, take the following into consideration.

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Why a Long Commute Doesn’t Make Sense

The CBC recently posted an article stating that a 200km commute to work in Toronto was worth it in exchange for a cheap mortgage outside the GTA. Even after waking up at an abnormally early hour for a long drive to work, ultimately extending the work day by a minimum of four hours, the interviewee agreed that it was worth it for the affordability of their mortgage.

The catch to this, CBC claims, is that “you’ve got to love driving”. Unfortunately, life isn’t quite that simple – the negatives of commuting such a long way five days a week far outweigh the positives of a less expensive home. Here are just some of the reasons why:

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Why “Waiting Out the Market” Doesn’t Work for Toronto Real Estate Investment

There are many factors that come into play when deciding to invest in real estate, with price being one of the larger deciding factors. While it may appear wise to take a “wait and see” approach to a changing real estate market in Toronto and the GTA, there are a number of reasons why waiting simply may not be the right choice for you.

 

Lost time is lost income

When planning to make a new real estate purchase with the intention of turning it into a rental property, the time spent waiting around for the market to react can result in a loss of critical rental income. Ideal properties, opportunities, and tenants come and go, but missing the chance to snatch them up can cost you.

 

In fact, the amount of rental income being earned over any period of time is far more significant than any incremental drop in average housing prices that may or may not occur. This source of income is steady and predictable in ways that the Canadian housing market simply isn’t. An interruption or a late start in receiving rental income will hurt your wallet far more than the amount hypothetically being saved by a slight future dip in the market.

 

Canadian housing prices very rarely fall

Perhaps the best advantage to taking the “wait and see” approach when buying a new property is the idea that housing prices will fall below the level they are currently at. While this may seem practical, in most cases it simply won’t happen.

 

Statistically speaking, the Canadian real estate market as a whole has proven year after year that price drops are incredibly uncommon. According to data collected by North Cove Advisors, the last significant drop in Canadian real housing prices was nearly a decade ago. Rather than prices falling outright, the real estate market instead tends to fall into periods of slow growth – not exactly the ideal outcome of the “wait and see” strategy.

 

Looking to the future

One way to know for sure that the “wait and see” strategy is not going to yield positive results in the current Canadian housing climate is by looking to the future of the market. The Toronto Real Estate Board is currently projecting at least a single-digit price increase throughout the remainder of 2017 – all signs currently point to it being correct in that assessment.

 

By analyzing recent developments in the housing market as well as historical data, you’ll soon discover that true dips in the prices of Canadian real estate are rare. Waiting for the “right moment” to buy can leave you sitting on your hands for years, losing a significant amount of potential rental income in the process.

 

If you are considering purchasing a rental property, contact Highgate Property Investments. Our business is both real estate and property management, and we can help you with all aspects of your new real estate venture.

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Home Prices Still Steadily Rising in Toronto

Industry experts are starting to call the problems in the Toronto housing market a “blip” rather than a bursting bubble. While it is true that in some areas, housing prices are going down, overall prices are still up year-over-year in the Toronto area.

Flood of listings sellers trying to cash in at “peak”

The primary driver behind the dip in Toronto home prices has been a flood of supply on the market, mostly from sellers looking to cash in on what experts had determined was the “peak” of the housing market in early 2017. Generally, when you are told prices are the highest they are going to get, you’re going to make the decision to sell.

However, the new listings are high-priced, and there are a limited amount of buyers that can afford the average home price of $746,218 across the GTA. Even condos, which used to be the entry-level option to the housing market, have an average price now of $519,000 – which is definitely out of reach of the single income individuals who usually purchase these properties. So while sales have decreased, prices remain steadily growing at a single-digit pace, in accordance with the Toronto Real Estate Board’s prediction earlier in 2017.

Will buyers come in off the sidelines after seeing steady price increases?

There are three things that could happen with prices in the Toronto housing market. The first sees sellers lowering their prices significantly in order to sell their properties. But since the primary driver for these sellers was to “cash in”, this is highly unlikely – although it is what buyers want to happen. The second option – the inventory will be pulled off the market or turned into rental properties, as there is a rental crunch in Toronto and the GTA, and non-selling properties could make their owners more money if they become rental properties.

A third option, and one advocated by the TREB which has so far predicted every move in the Toronto housing market correctly for 2017, is that buyers waiting on the sidelines for prices to decrease see them increasing instead, and decide to purchase homes in the fourth quarter of 2017 and the first quarter of 2018. Those hoping for a deal will see steady price increases month-after-month and will realize that the deals won’t materialize. What remains to be seen is if there are enough people with the incomes to afford Toronto and GTA housing at current prices to snap up the current supply.

 

Sales need to decline for a number of months to see a price drop

Big price drops don’t realistically happen unless sales decline over a long stretch of time – and there are other factors at play, such as sellers deciding to convert their properties to short-term or long-term rental properties rather than selling them if they don’t get the price they want. For now, real estate agents and industry experts are predicting an “insane” fall season for property sales in Toronto and the GTA.

 

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