Hey all! I’m so happy to be back blogging again. I’ve been brimming with ideas and I definitely missed having the creative outlet. I’m excited to get talking about the interesting parts of my career and life with you again!
This week, I wanted to revisit something I blogged about last year. It’s a question that I hear ALL THE TIME. ‘Sara, when’s the right time to buy your first house?’ ‘Sara, do I rent or buy?’
The reason I’m revisiting this is because I give a different answer all the time, because I get asked by different people all the time. As such, I give different answers. With that said, there’s common elements to my answers.
I’ll start by saying this: I personally believe that the best time to buy real estate is aways five years ago.
From a financial perspective, equity needs time to grow. Typically, you need about 3-5 years paying into a mortgage before you really start to see your equity – and your net worth – grow. The first few years – especially as first time owners – will feel especially hard because you’re paying and paying and paying, but not seeing the benefits.
If you’re the impatient type, you’re going to want to buy sooner than later because every year you wait is another year you’ll have to wait to see your equity grow. In short: rent or buy? Renting will never grow your net worth because you’ll never be able to build equity. Buy as soon as you responsibly can do so.
To make this advice more time-specific, I heard this question a lot more at the beginning of the pandemic when everyone was assuming that this was the end of high housing prices in the GTA.
And guess what didn’t happen?
Prices not only didn’t go down, they actually rose pretty consistently. People loved to say that the GTA real estate market slowed down, but I – as well as pretty much all other listing agents who worked through 2020 – can tell you that the only thing that really changed for us was how we handled showings.
So, if Covid didn’t impact prices, what did it impact in GTA real estate?
The answer is accessibility into the market, and the competitiveness of the offer process. Basically, it gave first time owners more of a fighting chance to get into the market because they were up against larger market movements which saw more experienced local buyers gravitating to places outside of the GTA, and international investors having less access to the market. That meant that many paid either listing price, or slightly below because sellers weren’t seeing the bidding wars that we saw pre-Covid and bought into the narrative that the market was ‘softening’. People who got good deals over the last year and a half likely just lucked into a panicked seller.
Recent as it was, that was the past. The GTA real estate market hasn’t ‘bounced back’ because it never actually dropped. We just saw buyers enjoy a little more elbow room in the offer process than they might have otherwise had. That didn’t mean they made out like bandits.
So, if you’re asking me ‘Sara, we want to buy a house but we’re waiting for the right time. When’s the right time?’, my answer is that it’s already passed. We just had a once-in-a-generation interruption to life as we knew it, and while it didn’t have a huge impact on housing prices like many hoped it would, whatever benefits it DID create for buyers become less and less beneficial by the day.
Waiting is not a strategy. Period.
If your monthly rent cost starts with a 2 or higher, you should already have a plan to buy.
Don’t have one? Let’s talk!