Why you should sell your condo today

Thinking of selling your condo? Now might be the right market, but does that mean it’s the right time to sell?

If you bought a condo in Toronto four to five years ago, you may be thinking now is a good time to sell. Toronto condo prices, according to Condos.ca’s PSF Index, are on the rise: Since February 2017, the average 800-square-foot condo has appreciated by about $78,000, and condos purchased in 2012 have increased its value close to $130,000. But does this rising market mean condo owners have to wait until prices rise even higher or sell now?

To sell or not to sell…

As the PSF index indicates, it is a good time to sell. The increase in value of your condo means that if you sell now, you can invest those increased earnings in the purchase of a new property, allowing you to continue to build equity. If that’s your plan, then selling now is smart because it will also allow you to enjoy the growing value of your new home. Many condo owners are hesitant to sell right now because those values ​​continue to rise; they could get a higher resale value if they waited another year to sell. However, it’s important to remember that the rest of the condo market is appreciating. in value, too. A year from now, you’ll be facing higher sales prices than you would today, and that may make your investment less profitable in the long run.

Then, of course, there are the price corrections that are coming. If the real estate market is experiencing tremendous growth now, is that just causing a decline? Price drops are hard to predict; however, it’s also important to remember that high growth leading to decline softens the impact of decline (if you gain 15% on market increases leading to 10% decline, you still have 5% upside). which means, based on the high growth rate of the Toronto condo market (particularly in downtown Toronto), prices aren’t very likely to go down below what you pay initially.

The pros and cons of choosing a new condo

We’ve established that now is a good time to buy, but that doesn’t help you realize than you should buy. New condo or resale condo, which is the best investment for you? Here are some pros and cons of each option.

Advantages of buying a new condo:

Lower purchase price (depending on market conditions).

· Better choice of locations within the building (if applicable).

· Wider range of options and/or upgrades.

· Less risk of having to undergo costly and intrusive repairs and renovations.

· New home warranty protection.

Cons of buying a new condo:

· You may need to rely on artist sketches and floor plans to get an idea of ​​the finished product before you buy. If this is the case, make sure the unit boundaries, location, finishes, materials, furnishings, etc. are clearly specified in the purchase agreement.

· You pay your deposit before you move in, which means it can be immobilized for the duration of construction.

It may be more difficult to obtain a mortgage from a financial institution for an unregistered condo.

· Construction delays may mean your unit is not finished on time, forcing you to find short-term housing.

If your unit is finished first, you may move in while construction continues on other units, exposing yourself to noise and interruptions.

Buy before you sell and grow your investments

It’s important to remember that just because it’s a good time to sell a condo right now doesn’t mean you have to or necessarily sell it. It’s a good opportunity if it’s something you’ve already been thinking about doing, but you also shouldn’t feel like you need to rush to sell your Toronto condo. In fact, if you are thinking of selling, the current market gives you a good opportunity to increase your capital and investments by buying a new property before selling your old one.

Why is it a good idea to buy before you sell right now? Because today’s market is a strong seller’s market: low inventory and high demand combine to speed up sales times. For example, for a condo valued between $500,000 and $1 million, the average number of days it will be on the market before selling is 29, and most don’t last that long. All you need to do is use the current equity in your home to open a line of credit and secure a down payment and purchase costs on a new mortgage. Once you secure your new purchase, you can easily sell your old condo.

If you buy before you sell, you can take advantage of increased condo values ​​by buying your new condo at a lower price and selling your old condo at a higher price. The difference could have an impact on your ability to increase your capital.

What does it mean to increase your wealth? It means investing in a property of higher value, so that your investment can continue to grow. If you’re currently in a one-bedroom condo, look for a larger unit or a two-bedroom for your next investment. You don’t want to move sideways through the condo market, even if the increase in condo value makes it seem like a good investment, as land transfer tax, REALTOR® fees, and legal fees can reduce those gains . Move up in the condo market by investing in something with more value so that your investment works longer and more effectively for you.

Alternatively, you could increase your investment by keeping your old unit and renting it out – the current median rental price in most Toronto neighborhoods can cover the monthly costs of ownership, including your mortgage payment, maintenance fees, and property tax. the property, often at a small profit margin (which you want to keep to a minimum to minimize taxable income anyway).

Conclution

In short, it’s a great time to own a condo right now, especially if you’re looking to invest in financial growth, whether you’re hoping to raise your equity by selling or renting your current unit.