TORONTO — Sitting of the cusp on a new year and reflecting back on 2020, clearly one of the big winners has been the real estate market. As household conversations evolve around where and how we want to live and even work. It is only natural to ask if the market has already gone too far too fast and wonder if you have missed a once-in-a-lifetime opportunity to find your forever home?
I would argue you have not missed the opportunity if you plan on buying and holding on to it for a reasonable period of time. Two driving factors: low interest rates for longer as telegraphed by the Bank of Canada governor Tiff Macklem and a pandemic that has shone the spotlight more clearly on lifestyle decisions.
Disclaimer: I’m not a real estate expert but I am a real estate buff.​
We love real estate, and over the past 25 years, we have bought and sold six principle residents and six recreational properties. The majority of our housing transactions made money, and we broke even on a couple. There have also been lessons learned along the way.
Here are a few.
1. Listen to the experts. They are qualified in their field, so believe them when they say location sells. Try not to be the most expensive house on the street and don’t let your emotions drive your buying or selling decisions.
2. Don’t fall in love with your assets, or in this case, your home. Sometimes you need to make tough decisions financially and that may mean selling the family home. Your assets will never love you back but your family will.
3. When selling, don’t be greedy. If your home isn’t selling, it is priced too high. Listen to what prospective buyers are silently telling you as they move on and check out the next listing.
4. Get your home ready to sell as soon as you move in. Life has a funny way of throwing you a curve ball when you least expect it. Curb appeal matters but the inside likely matters more. This is where you live. Keep it neutral and up to date. Look at your home as a prospective buyer would. Small changes can yield big financial results.
5. Avoid concentration risk. Don’t put all your money in the real estate basket.
6. Take the time to save up the down payment. Consider all-in and all-out costs such as insurance, appraisals, real estate, moving, land transfer costs and the dreaded unknown repairs. There will always be something that requires your financial attention.
7. Don’t buy beyond your means. I’ve been there and it isn’t fun. No one wants to be 100 per cent house poor. You aren’t expected to be flush with cash when you are a new homeowner but you also don’t want to live life worrying about the next mortgage payment each month.
8. Buy low and sell high. Even if you love real estate you are always scouting out new opportunities, this investment mantra still must hold true.
9. Focus on your stage of life. Do you really want to be building your dream home for your family as your children head off to university or are beginning to build their own lives under their own roof? Just because you want your family there doesn’t mean they will be. Buy for reality not dreams.
10. Put in offers earlier in the week. You are more likely to have less competition and more likely to get a deal if you do. Everyone is out looking on the weekends. Don’t follow the herd mentality.
11. Take advantage of the capital gains exemption on your principle residence. This is one of the best tax-savings opportunities to create wealth I know.
A new report out today by Royal LePage is forecasting prices to rise 5.5% by the end of 2021 as low inventory and unmet demand kicks into gear.
Will we be sniffing around – always but we also tend to practice what we preach.
