Mississauga Real Estate BLOG

If you can afford it, don’t put off till tomorrow what you can do today.

It doesn’t matter if you look at homes sold or homes for sale in Mississauga, Oakville, Etobicoke or anywhere else in the GTA, the news is always the same; sales are up, prices are up and the market is almost as hot as the hottest year ever. Interest rates are low and demand is high creating a very frustrating market for home buyers.

In the 905 area code average prices are up 8% for a detached home (average being $579,892), 10% for a semi detached (average being $400,442), 6% for a townhouse (average being $359,382) and 8% for a condo (average being $292,416). The questions still remains.. when will it stop?

No one has a crystal ball but in the short term it doesn’t look like much is going to change. Due to the European debt crisis it looks like interest rates are going to remain unchanged for a while. Even if they do start to inch up prices will go up before they start to go down. Similar to the stock market, the GTA real estate market tends to panic at the slightest bit of good or bad news. The difference is it takes a bit longer for any impact to be felt in the real estate market largely due to the fact that a property can’t be purchased on the internet in 5 minutes as can be done with stocks purchases.

If and when interest rates go up the likely scenario would be for the next month there would be an additional of surge of buyers on the market who want to take advantage of current rates before further interest rate increases are posted. These would be the buyers that were sitting on the sidelines either waiting for prices to go down or saving up more money. This surge of buyers would result in a steady increase in prices until the demand was satisfied or the buyers went back to the sidelines in frustration. At that point, and if rates continued to climb, a slow decrease in price could follow. The length of time it would take to see any meaningful decrease in price would be approximately 6 months. If rates continued to increase during that 6 months then a buyer may not be any better or worse off then had they bought a house 6 months before. It’s the damned if you do, damned if you don’t scenario.

All I know is I lost 40% on my RRSPs. In my book stocks are out real estate is in. Similarly my advice would be, if you can afford it, don’t put off till tomorrow what you can do today.

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Cynthia Shaw, is a licenced Mississauga Real Estate Agent with Sutton Group Quantum Realty Inc., Brokerage in Mississauga Ontario. Let Cynthia’s extensive knowledge in Mississauga real estate guide you in purchasing your dream home.

Waiting for the market to cool off before buying a home could end up costing you more money then it would if you bought a home now and took advantage of the lower mortgage rates mortgage.

With predictions of home prices set to fall many potential home buyers including home upgraders are choosing to sit on the sidelines and take a wait and see approach with their real estate plans. Home buyers refusing to participate in multiple offers are also bowing out until the market cools off a bit. Is this the right approach?

Since March when predictions were released that Mississauga Property values along with most other areas of the GTA would experience a price reduction of 20—25%, the Mississauga real estate market along with most other markets across the GTA have continued to flourish. During the first two weeks of April the average selling price of a home increased by 1% as compared to the average selling price at the end of March 2012. Although this average price does not necessarily mean that all homes have increased 1% in value in two weeks, it provides some guidance that home prices are still on the increase. By the end of the month the year over year increase in average selling price was up by 8%. Total sales figures were up 18% over last April.

The inventory of homes on the market continues to be very tight and there are more buyers out there then there are homes for sale. The hope is that as we move further in to spring the inventory will increase and prices will stabilize. If not then what next?

A continued tight inventory will push prices up even further. At the current level of monthly increases in the average selling price that could amount to an increase of about 12% over the next year. Based on the year over year average increase of 10% published for March 2012, this 12% doesn’t seem totally out of whack.

The Canadian economy seems to be moving along quite well and according to the “Big Bank Chief” if it continues to improve a gradual increase in the central bank rate could lead to an increase in lending rates. Some economists believe the increase will start towards the end of 2012.

Typically the real estate market doesn’t react quickly to moderate economic changes. Historically in an increasing interest market it takes about 6 months before the rate increases have an effect on home prices. Given the record low rates in the market right now it would not be unreasonable to assume that, should the central bank begin to raise rates at the end of the year that actual mortgage rates will be 1% higher by this time next year. Given the current market conditions and the length of time it takes the market to react to changes waiting for the market to cool off before buying a home could end up costing you more money then it would if you bought a home now and took advantage of the lower mortgage rates mortgage.

The basis of real estate is that a home is worth what a buyer is willing to pay.

Six months ago the word was out from various economic experts that Toronto home prices, Mississauga home prices, Oakville home prices and almost every other area in the GTA were going to decline between 10% to 30% in the upcoming year. In December those figures were revised to reflect a more modest drop of 5% – 10% in the first half of 2012. March reports indicate that the GTA market is overvalued and that some economists expect a correction of 20-25%. Seems to be a lot of confusion as to what the future holds.

I have never had an explanation of how one calculates that a home is overvalued. The basis of real estate is that a home is worth what a buyer is willing to pay. Now recently in Toronto a small bungalow was listed for $950,000 and sold for $400,000 over the list price. The sale was the talk of the neighbourhood and at first when I heard the news from my mother in law who lives in the neighbourhood I thought she must be mistaken. The news that night reported the sale exactly as had been reported by the neighbourhood grape vine. Turns out the home was purchased by Chinese immigrants. The news report on this sale went further to explain that the purchases by immigrating Chinese are on the rise as they find Toronto home prices, Oakville home prices and Mississauga homes prices to be a good deal. In the context of “a home is worth what a buyer is willing to pay”, in China that $950,000 home would be somewhere around $7 million U.S. dollars. Obviously then to someone from China that small bungalow is a real deal at $1,250,000. We are living in the best country in the world and in one of the best cities in the world. In comparison to other world class cities property in the GTA is still very reasonable.

Let’s look at the market itself. New listing activity is very tight. Although there seems to be a slight increase in the amount of homes coming on the market, the number of buyers entering the market continues to surpass the number of new listings. This has been the case quite regularly for the past year. Trying to find a home in Mississauga for a buyer is a full time job. Either the home is a wreck or there are 5 people wanting to put an offer in at the same time.

Economically there seems to be some light at the end of the tunnel for the U.S. economy. Maybe it’s just a blip but in the long term that can only be a positive factor for the Canadian economy. When the economy is good there is always a positive impact on housing and the real estate market. It either puts upward pressure on the prices or keeps it stable. I never heard of prices of prices going down in a good economy.

I suppose these economists who predict the decreases in home prices are using historical figures and very complicated formulas to determine where real estate prices are going to go. I guess I view that process like the providing a weather forecast. This winter was to be unusually cold and stormy weather. For some parts of the country that meant a frigid climate; while for others, it’s lots of rain and snow. It was to be a winter of “clime and punishment” with cold to very cold temperatures. Winter really never arrived and neither will those decreases.

Looking to buy or sell your home in Mississauga, Oakville, Toronto area? Don’t hesitate to contact the best Mississauga Real Estate Agent Cynthia Shaw.