1st Time Buyer Dilemma: Buy Now or Later?

Posted by:Aleksandra Oleksak

Right Decision, Wrong Decision Road Sign

With all the mixed messages floating around about the Toronto real estate market, it’s hard to know, especially if you’re a first time home buyer, if you should buy now or buy later. Is it the right decision or the wrong one? While I always tell my buyers the question they should ask themselves is, if it’s the right time to buy for themRateHub.ca has broken it down, to help you along with your buying decision, take it away…..

2012 was a rough year for first-time homebuyers – not only were mortgage rules tightened, making it tougher to qualify, but there’s no clear consensus on where home prices are heading in 2013. This has left many first-time homebuyers sitting on the fence, wondering what to do. Are house prices heading for a nosedive or will they continue to sky high?

If you pick up the latest issue of Maclean’s, you’d think we were in the midst of a housing crash already. While sales have slipped in Toronto, with the exception of condos, prices have remained steady. Should you buy now or wait until prices fall? Here are some factors to consider:

Buy Now

Low Interest Rates

With 5-year fixed mortgage rates available for as little as 2.89 per cent, there’s never been a better time to buy. Who knows where interest rates will be by the end of 2013? If interest rates rise, not only will your mortgage payments increase, it could become more difficult to qualify.

Steady Prices

With the exception of new condos in the downtown core, house prices are holding steady. Detached single-family homes are still in high demand, in Toronto. What if house prices continue to climb and you’re priced out of the market? You’ll kick yourself for not buying when you had the chance.


Toronto is one of the top places for immigrants to settle. With the constant inflow of immigrants, they will always need a place to live. While house prices may fall in surrounding Ontario cities like Kingston and Windsor, Toronto should remain strong, as the city is where most of the high-paying jobs are found.

Buy Later

Falling Sales

While prices have remained steady, there’s no arguing sales are falling. According to the TREB (Toronto Real Estate Board), home sales were down 19.5 per cent in December versus 2011. With sales falling, are prices sure to follow? In Vancouver, both home sales and prices are in a free fall – could Toronto be in for a similar fate?

New Mortgage Rules

First-time homebuyers were most affected by the new mortgage rules. Maximum amortization is now capped at 25 years, if you have less than a 20 per cent down payment. As a result, you’re forced to sit on the sidelines and save a larger down payment or settle for a less costly option like a condo. With fewer first-time homebuyers in the market, could home prices fall?

Interest Rates Rise Sharply

The Bank of Canada is committed to keeping inflation low. What if inflation gets out of control and interest rates increase sharply? Homeowners could default on their mortgages, and banks would then have to sell the houses. With an influx of houses on the market, prices would surely fall.

Nobody truly knows where house prices are heading in 2013. But if you have a large enough down payment, it’s a good time to consider buying in Toronto.

First time home buyers, has this changed your mind to buy now or buy later?

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