Even though there was a real estate boom in Toronto 2005 - 2008, the
beginnings of the current crash of the Toronto real estate market were starting
to make themselves known given the amount of new condo supply coming online. The
market started to crash in 2008 resulting in total devastation of most of the
North American market in 2008 and bankruptcies of companies and individuals at a
rate not seen since the Great Depression. Thousands of brokers, mortgage
companies and real estate agencies have gone under as a result. As 2008 drew to
a close, it was clear that the market was not going to rebound in the near
future and foreclosures and loan defaults continue in 2009. The Toronto real
estate industry, while slowing considerably for some time, made it through
relatively unscathed.
While the news is full of doom and gloom about the housing market on a daily
basis, and with Toronto real estate still doing well, there are still ways in
which Toronto real estate buyers can protect themselves in the coming crumbling
of Toronto real estate.
Take a close look at your mortgage to determine what type it is. Adjustable rate
mortgages, which were once very attractive to buyers, are no longer the correct
option to take. You may enjoy lower payments with the low interest rates right
now but as the rate adjusts higher the monthly payments will also increase
dramatically. The interest rates in Toronto at the present time are the lowest
they have been in quite some time, so now is the best time to lock in the
mortgage at a fixed rate. In this way you will know that no matter what changes
occur in the interest rates on the market, your mortgage payments on your
Toronto real estate will not increase.
Homeowners in Toronto who presently have their homes on the real estate market
and are experiencing difficulty with the sale can make concessions in order to
attract interested buyers. This includes lowering the price and offering to pay
for a home inspection. There is a glut of homes on the market and the buyers are
not so easy to convince as they once were. If everything is not to their
satisfaction, they walk away from the real estate sale without a second thought.
You may also consider throwing in a few extras along with the house in order to
make a sale. The draperies usually are part of the sale, but if you have rugs on
the floor or artwork on the wall that the buyer really likes, you can include
these articles in the sale of the home. Another option you have in helping you
wait out the recession in the real estate market is to consider renting the home
for the same price as you are paying for the mortgage.
However, buyers of Toronto real estate are at a disadvantage in the current
state of the real estate market. Many who would have qualified for a mortgage in
2007 are now finding that they do not meet the lending criteria for such a loan.
Lenders are wary of risking any more money in the Toronto housing market because
they already have scores of loans in default and foreclosed properties that they
are trying to sell. A first time homebuyer with an outstanding credit rating and
a steady income may not even be able to take out a mortgage because the down
payment requirements have changed. Lenders require a larger percentage of the
purchase price as a down payment – the days of little or no money down in
Toronto real estate are no more.