Why Now May Be the Best Time to Buy?

Buy low, sell high – that is how you become rich…is pretty much like saying, get this week’s winning lottery number, then go back in time a week and play them. Yes, you would win, but it is not a winning strategy since we can’t time travel. Saying, “let’s wait until the market hits bottom to buy” is the same logic. You only know the market has hit bottom when it starts to go up, thus missing when it hit bottom. Many sellers in February and March were playing the same game by holding off on listing until the house prices hit the peak. We took some of these listings in June and found that some people were kicking themselves for not selling in March/April.

Buyers are doing the exact same thing now, sitting on the fence to see if prices will drop more. Forbes published an article titled “17 Counterintuitive Things Most Successful People Do” and it states, “You’re always going to get the same results, doing what everyone else does. Sometimes you have to know when to zig where others zag.” So in April, when buyers were lining up in herds to buy and competing with 12 other buyers, and were jumping in with no conditions, maybe that wasn’t the absolute best time to buy. Don’t worry if you did though, historically, over any 5 year period in Ontario, real estate has always been a good investment.

So, now when Guelph prices are down 13% since April, the fact that inventory has tripled and there are no insane bidding wars you would think that all those buyers that were so frustrated with competing would be loving this market. However, that is not the case as most buyers are sitting on the fence waiting for prices to drop to the absolute lowest.

Hey, I’m not saying that I have always followed this advice. In 1998 my husband and I purchased a new build home. In the stock market, it was the time of the dot.com frenzy. Our house closed December 1998. We had put a lot of money in to high-tech stocks and when our new place was ready we were going to pull it out and put the money into our house. But then our dear friend greed had a much better idea, why wouldn’t we leave it in the stock market for another year… We put a higher mortgage on our house than we had planned but with the way the high tech stocks were going up, if we waited a bit longer we could sell our stocks and be mortgage free! What our friend greed didn’t realize was that the stock market was about to drop dramatically and 13-15 months later, our stocks were almost worthless and we had lost $300,000!!

We don’t have a crystal ball but we have the next best thing. What has happened in the last few months in Toronto (and rippled to Guelph) happened a year ago in Vancouver.

I’m not the only one who believes this, BMO chief economist Douglas Porter believes that Toronto’s market will likely follow the Vancouver playbook: a sharp drop in sales and big upward spike in listings, with a moderate cool-down in prices followed by more subdued appreciation compared with the pre-tax mania,” It took the Vancouver market about 5 months before prices started to rise. The Toronto market slowed right after the foreign tax was announced. In Toronto’s case, month 5 would be September. So, I would say it is an excellent time to buy; prices are down, inventory is up and we are in a high vacation period. These are all excellent factors in making it the best time to buy for quite a while. You could wait for prices to go up and wait for all the other buyer to start jumping back in or you could zig while other buyers zag