Thinking of selling your condo? Now might be the right market, but does that mean it’s the right time to sell?
If you bought a Toronto condo four to five years ago, you may be thinking that this is a good time to sell it. Condo prices in Toronto, according to Condos.ca’s PSF index, are on the rise: Since February 2017, the average 800-square-foot condo has appreciated by approximately $ 78,000, and condos that were purchased in 2012 have risen in value at about $ 130,000. But does this rising market mean that condo owners should wait until prices go up even higher or sell now?
To sell or not to sell …
As the PSF index indicates, it is a good time to sell. The increase in the value of your condo means that if you sell now, you can invest those higher profits in the purchase of a new property, allowing you to continue to increase your equity. If that’s your plan, selling now is smart because it will also allow you to enjoy the growing value of your new property. Many condo owners are hesitant to sell at this time because those values continue to rise; they could get a higher resale value by waiting another year to sell; however, it is important to remember that the rest of the condo market is appreciating in value as well. A year from now, you will face higher sales prices than you would today, and that may make your investment less profitable in the long run.
Then, of course, there are those price corrections to come. If the housing market is experiencing tremendous growth now, is that simply causing a drop? Price drops are difficult to predict; however, it is also important to remember that high growth leading to a decline softens the impact of the decline (if you win 15 percent on market increases leading to a 10 percent decline, you’re still above 5%) . which means that, based on the high growth rate of the Toronto condo market (particularly in the Toronto core), prices are not very likely to fall below what you pay initially.
The Pros and Cons of Choosing a New Condo
We’ve established that now is a good time to buy, but that doesn’t help you realize that you should buy. New condo or resale condo: which is the best investment for you? Here are some pros and cons of each option.
Advantages of buying a new condo:
Lower purchase price (based on market conditions).
Best choice of locations within the building (if applicable).
Wider range of options and / or upgrades.
Less risk of having to undergo costly and intrusive repairs and renovations.
· New home warranty protection.
Cons of buying a new condo:
You may need to rely on artists’ sketches and floor plans to get an idea of the finished product before purchasing. If this is the case, make sure the unit boundaries, location, finishes, materials, personal property, etc. are clearly specified in the purchase contract.
You pay your deposit before you move in, which means it may be immobilized during construction.
· It may be more difficult to obtain a mortgage from a financial institution for an unregistered condo.
Construction delays could mean your unit isn’t finished on time, leaving you scrambling for short-term housing.
· If your unit is finished first, you can move in while construction continues on other units, exposing you to noise and disturbance.
Buy before you sell and grow your investments
It’s important to remember that just because it’s a good time to sell a condo right now, it doesn’t mean you should or necessarily should sell. It’s a good opportunity if it’s something you’ve already been thinking about doing, but you shouldn’t feel the need to rush into selling your Toronto condo either. In fact, if you are thinking of selling, the current market provides you with a good opportunity to increase your capital and investments by buying a new property before selling the old one.
Why is it a good idea to buy before you sell right now? Because today’s market is a strong seller’s market – low inventory and high demand combine to speed up sales times. For example, for a condo valued between $ 500,000 and $ 1 million, the average number of days it will stay on the market before being sold is 29, and most don’t last that long. All you need to do is use the current value of your property to open a line of credit and secure your down payment and purchase costs on a new mortgage. Once you secure your new purchase, you can easily sell your old condo.
If you buy before you sell, you can take advantage of the increased value of condos by buying your new condo at a lower price and selling your old condo at a higher price. The difference could have an impact on your ability to grow your capital.
What does it mean to increase your capital? It means investing in a higher value property, so your investment can continue to grow. If you are currently in a one-bedroom condo, look for a larger unit or a two-bedroom for your next investment. You don’t want to move sideways through the condo market, even if the increase in condo value makes it look like a good investment, as land transfer tax, REALTOR® fees, and legal fees can reduce those gains. . Move up the condo market by investing in something of higher value so your investment works harder and more effectively for you.
Alternatively, you can increase your investment by keeping your old unit and renting it out – the current average rental price in most Toronto neighborhoods can cover monthly costs of ownership, including mortgage payment, maintenance fees, and property tax. property, often with a small profit margin (which you want to keep to a minimum to minimize taxable income anyway).
In short, it is a great time to own a condo right now, especially if you are looking to invest in financial growth, whether you want to increase your equity by selling or renting your current unit.