Even if you have been absent from the real estate scene for the past several years, you are probably at least somewhat familiar with the current state of the market. After all, it has permeated our news cycle for many months now. 

For most individuals, selling and buying a home is something that only happens a limited number of times in a lifetime. Many homeowners take the route of buying a “starter” home and then upgrading into their family home before retiring and downsizing into their final home. 

In many cases, these three transactions occur years or even decades between each other, meaning that the market conditions experienced when you first bought your home could be staggeringly different than when you are ready to sell it. 

This is something we are currently seeing, with many clients having bought homes in the late 1990s and early 2000s. The real estate market—and more specifically, the luxury real estate market—has completely changed. 

Here is what you need to know. 

Home Prices are at an All-Time High 

In 2009 and 2010, a luxury home could have fetched anywhere from $500,000 and above in the price. Today, that price-point is more reflective of a starter home than a luxury property. Although at Armin Group, we strongly believe that luxury is about more than a price-point, it cannot be ignored when discussing the ever-changing market. 

The average price of a home in Toronto this year has exceeded the $1 million mark and is expected to increase over the next year at least. 

At Armin Group, we believe that luxury is more than just a price point. Read our post about The New State of Luxury Real Estate in Toronto here. 

Competition is Also at an All-Time High

Dwindling inventory is not only contributing to the rising luxury home price in Canada, but it is also creating an environment where buyers need to be flexible and prepared to act quickly if they want to secure a home. 

2020 and 2021 have seen Canada enter one of the most competitive seller’s markets in recent history. Many luxury listings see multiple offer scenarios, with some turning into bidding wars between eager buyers all vying for the ultimate prize. 

However, this doesn’t mean that you can expect to put any house on the market and get hundreds of offers in one day. Homes still need careful preparation and exceptional marketing to appeal to these hungry buyers. This brings us to the next point. 

Buyers are Savvier

Ten or twenty years ago, technology was vastly different than it is today. Buyers had fewer resources and would need to rely on more traditional means. For example, virtual tours, video calls, and interactive floorplans were all either nonexistent or not yet at the level we know and expect today. 

Modern buyers are savvier than ever. With the help of the internet and the constant influx of information available, they expect everything at the tip of their fingers. They can research a property within minutes and know more about it in one day than buyers of the past would know after several showings. 

As a result, these new buyers know how to find value in a luxury property. This means that although homes for sale are in great demand, you still need to ensure your home presents great value to these intelligent, market-savvy buyers. 

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Whether you’re new to selling or you have simply been out of the market for a few years, there are a few things you need to know about preparing and marketing your home for a successful sale. Get started with some of resources here:

• Is it Better to Buy First or Sell First?
• How to Prepare Your Home to Appeal to Millennial Buyers
• Diversifying Your Investment Portfolio Into Retirement

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Financing is Different Too

Since the late 1990s and 2000s, we have experienced significant reform and policy changes to help Canadians better manage mortgage debt and find protection from a situation similar to the market crash of 2008. 

As a result, policies around securing a mortgage have changed over the years. For instance, the stress test rules have become tighter and buyers are now required to have at least a 20% down payment on a home with a sales price of $1 million or more. 

Those seeking a new mortgage or mortgage financing must pass what is known as a stress test from their lender. The mortgage stress test was introduced in 2018 and it essentially calculates and estimates the borrower’s ability to pay back their mortgage should the interest rates go up. Using a fictitious mortgage rate set higher than the current actual rate, the lender can determine if the borrower can afford their payments in the future. 

Interest Rates are Low—For Now

As a measure to help minimize the economic impact of the COVID-19 pandemic, the Bank of Canada essentially lowered the benchmark interest rates. This is part of the reason why the housing market has been so hot lately.

Today, buyers can still lock in record-low interest rates. However, the Bank of Canada has also recently announced that these economic precautions are no longer necessary, essentially moving up the timeline for interest rate increases. 

In the new year, we expect many buyers to seek pre-approval and a quick transaction to take advantage of low-interest rates before they are projected to rise in the spring. 

Whether you have been out of the market for 10, 15, or even 20 years, Armin Group can help you navigate the new waters of today’s real estate sphere. Our market expertise, local knowledge, and passion for high-quality service make us the best choice for homeowners like yourself looking to maximize your investment in a competitive market. Reach out to us today here to get the conversation started.