Welcome back to Elixir Talks! Today, we're debunking myths about the optimal timing for real estate transactions. The perennial question remains: when is the best time to buy or sell? Let’s go into detail about this with some perspective.

As general consumers, we aim to maximize gains and minimize losses, and real estate is no exception. Many hope to pinpoint the ideal time for their transaction to prosper.

‘Waiting for the bottom’

For buyers, the goal is often to 'wait for the bottom,' a mythical perfect moment when prices hit their lowest. However, pinpointing the market's bottom is challenging, influenced by numerous factors like borrowing rates, government policies, and global events. Real estate is fundamentally a long-term investment, not suited for those seeking quick exits.

Take the Greater Toronto Area, for example. After the interest rate hike at the start of March 2022, the market began to decline, hitting a low by fall 2022. Despite attractive pricing, buyers hesitated due to the high-interest rates and negative market sentiments. This trend persisted throughout 2023, only for the market to surge unexpectedly by early 2024. We saw credible traction and the market demonstrated a 7.9% month-over-month price increase in February 2024 in the Greater Toronto Area.

Over these past two years, we've secured excellent investments, yet a significant number of consumers awaited the elusive market bottom. In the later half of 2022 and the majority of 2023, there were a lot of good deals which we were able to get for our clients. We are now in the Spring of 2024, and the market's sudden movement and the return of competing offers illustrate that market timing is unpredictable. There have been no rate cuts announced so far, it's just the anticipation of that which has changed the market, this unpredictable behaviour of the market makes the case prudent that Real Estate should be a long-term investment. 

When is the Ideal Time to Buy?

The ideal time to purchase should align with your personal goals, financial readiness, and investment quality, focusing on a long-term horizon. Real estate typically appreciates over time, offering a shield against short-term market fluctuations.

Analysis paralysis can sideline potential buyers, fearing incorrect decisions and ultimately making none. This fear prevents taking timely action.

‘Sell at the peak’

Sellers often aim to 'sell at the peak,' hoping to pinpoint the market's highest point. Identifying this peak is as elusive as predicting the bottom, and missing the peak can lead to steep declines and "chasing the market," resulting in incremental price reductions insufficient to match market expectations.

I recall the peak of the last wave in late 2021 and early 2022 when many could have sold at a premium but waited for more, only to see the market crash, leading to missed opportunities and the burden of carrying costs due to higher borrowing costs.

Real estate cycles are normal. Focusing on your long-term goals rather than trying to time the market is key. Sudden policy or interest rate shifts can impact prices in short order, but with sound advice from a knowledgeable Realtor, you can navigate these waters successfully.

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Off: 416-816-6001 | [email protected]