The number of economists and experts advocating that the Toronto Real Estate Market is now at the top of its business cycle has significantly increased recently.  This is further supported by mortgage lenders who have tightened their requirements and the federal government who has continued to implement subtle changes to reign in the appetite for Toronto real estate. Have we finally reached the top and what does that mean to home sellers and buyers in Toronto?

To figure out the impact of the real estate cycle on your own situation to help you decide when to sell your house or investment, take a look at the follow 4 components and then compare them to the 4 factors for your neighbourhood.

4 Components:

1. Reason: Reason (Selling your house to downsize, upsize to larger home, move to a more desirable neighbourhood, move out of Toronto or selling your investment property to capitalize on your property gain
2. Timeline: How quickly you need to act on your transaction
3. Type of Property
4. Specific Neighbourhood (location, location, location)

The Toronto real estate market is actually a collection of 140 individual neighbourhoods, each one with its own economic dynamics and sensitivity to the overall business and real estate cycle. I would need to write a thick book to cover and explain these dynamics and what it means to present and future property values. This is where you need a good Real Estate adviser with a solid understanding of the economics of real estate and knows about specific Toronto neighbourhoods.

4 factors that will help you understand how sensitive your neighbourhood’s house prices are to the real estate cycle:

1. How long residents have lived in their home in your neighbourhood. The likelihood of them selling decreases the longer they’ve been living there, even during economic downturns.
2. Reliance of residents in your neighbourhood on their job to meet their mortgage or rent obligations. This includes ratio of mortgage to equity in their homes, the reliance on any one source of income and amount of liquid savings to survive through a tough period.
3. The ratio of individuals waiting to buy a home in the area and the amount of available home inventory for sale.
4. The quality of local schools. Families with children make up the largest buyer group in most neighbourhoods and a primary consideration is usually the local schools for which they will pay a premium.

If you do decide to sell your house, I can help you get the best price for you home in any market.

For a free market value assessment of your house and a discussion of your situation and options, call me, Baldo Minaudo, MBA at 416-698-2090.