Sell First or Buy First? That is the Question.

It is important to evaluate the market conditions in your specific area in order to come up with the best strategy when buying and selling real estate.

Buy First then Sell

Buying first, puts the pressure on selling your home within a tight time frame. A gutsy move in any market requiring expert market analysis and a focus to ensure your home shows well to a broad audience. The Toronto Real Estate market has experienced a fairly aggressive Sellers market in most communities over the past year. This means that due to many factors (such as low lending rates and low inventory of homes) fairly priced homes are able to sell within a matter of days or weeks. Although there is no crystal ball Spring Realty is constantly evaluating the market statistics and predicts a more stable market with fairly flat appreciation in 2012 leaning more toward a ‘Sell First’ strategy.

Sell First then Buy

This is a strategy that works best in a declining market or balanced market. Under such conditions buyers often take a ‘wait and see’ approach hoping for sellers to cave into lower prices. Sellers keep their properties on the market longer waiting for ‘their price’ which increases inventories. In this scenario there are few “bidding war” type situations. Selling first would get you out of your current investment and will give you the ability to choose from one of the many available options without competing with hundreds of other buyers. This strategy also has the backup option of a lease if the right home isn’t found within the time frame.

To keep it simple Spring Realty suggests you Buy First in a “Hot” market and Sell first in a declining or balanced market. Of course this is a general rule of thumb and there are always exceptions. Contact us to discuss your specific situation.

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USA loses AAA credit rating

Following a week of market losses Standard and Poor’s downgraded the United States credit rating from AAA to AA+ on Friday.  Volatility has been constant since the market fall of 2008 and is certain to continue as the markets officially react to the news.

Investors of all sizes are diversifying their portfolios to include heavy weightings of real estate which have proven to be low volatility.   Real estate is priced based on pure demand and supply pressures.  In Toronto the demand will continue to increase as the population grows.  With limited development of high speed rail corridors to the suburbs there is only so much sprawl that can be supported limiting supply which pushes the price of existing stock higher.

With hardly any new apartments being built small investors are becoming landlords by purchasing one or a few condos and renting them out to pay the mortgage.  With long term investing in mind this type of investment can create excellent cash flow and quickly build equity for investors.  Renters benefit from modern buildings with excellent amenities.

Supply is almost completely static in terms of single family houses in the city.  We’ve recently seen surges in the price of houses in neighbourhoods close to downtown such as the south east end of the city (South Riverdale, Danforth, etc). With interest rates at historical lows homes which may have been previously be considered undesirable have been renovated or are purchased with renovations in mind.

If you’re considering diversifying your investment portfolio to include real estate contact Spring Realty today.