Pace of Home Sales Remains Brisk in October

November 3, 2011 -- Greater Toronto REALTORS® reported 7,642 home sales through the TorontoMLS® in October 2011. This represented an increase of 17.5 per cent compared to the 6,504 transactions reported in October 2010.

Monthly sales data follow a recurring seasonal trend that should be removed before comparing monthly results within the same year. After adjusting for seasonality, the annualized rate of sales for October was 97,100, which was above the average of 90,700 for the first three quarters of 2011.

"The pace of October resale home transactions remained brisk in the GTA. This bodes well for a strong finish to 2011," said Toronto Real Estate Board President Richard Silver. "Home buyers who found it difficult to make a deal in the spring and summer due to a shortage of listings have benefitted from increased supply in the fall."

The average selling price through the TorontoMLS® in October was $478,137 - up eight per cent compared to October 2010.

"Sellers' market conditions remain in place in many parts of the GTA. The result has been above-average annual rates of price growth for most home types," said Jason Mercer, the Toronto Real Estate Board's Senior Manager of Market Analysis. "Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the City of Toronto and surrounding regions."

Buying a home: 7 things you need to know

Buying a home is the largest purchase you’ll likely make. No wonder you’re stressed. Where should you look? Can you afford it? What will happen if interest rates rise? It may all seem daunting, but you can make it more manageable with a little planning. Here are a few things to figure out before you make the leap.

1. Get your financial house in order

Figure out your net worth, which is your assets less your liabilities. Assets are things like cash, investments, savings, cars, boats and so on, while liabilities are things you owe – car loans, amounts on lines of credit, overdrafts, credit cards. Subtracting one from the other tells you what you’re worth. Hint: If you get a negative number, you should probably re-think the whole thing.

The bigger the down payment the less interest you will pay in the long run. Well before you start looking for a house or condo, build a budget that will allow you to put some money away each month for that down payment.

2. Talk to an agent or your bank

Choosing a mortgage is like going to an ice cream parlour – there are dozens of choices and different flavors.

It may be time for a mortgage broker or adviser at your bank. A mortgage broker will shop around, much like an insurance broker, to find you the best deal. Your banker will sell you a mortgage offered by the bank. That doesn’t mean you can’t negotiate with your bank. The posted rates are a starting point and you can usually get a better deal. If they won’t negotiate go somewhere else.

3. Terms and rates

The next decisions revolve around how long you want to lock the mortgage in and than will determine the rate of interest you pay. This is called the mortgage term and can be as little as six months or as long as seven years. It locks you in to a set of payments for the length of the term. Shorter terms have lower rates of interest.

Along with this is the amortization period, or the amount of time it will take to pay off your loan. It might run anywhere from say, 15 to 35 years.

The longer your amortization, the more interest you will pay. It may be worth considering a weekly mortgage. The monthly payment is divided by four, but the advantage is that you make four extra payments a year which are applied to principal. It’s a painless way to pay down your mortgage faster.

4. Have realistic expectations

First time buyers often start with a wish list that may not be realistic given their resources. Starting big is fine, as long as you recognize that along the way you’ll make trade offs between location, size of house and features.

First, assess your lifestyle . If you are single, enjoy walking to Starbucks for a latte and hate cutting grass, then a detached home in the suburbs is likely not for you.

Make a list of the things you want. Do you need a two car garage? Space for a home office? Are you going to have children? Is it a good location? [hotlink to 10 things story] Don’t look at the house in isolation. Make sure the neighborhood, schools and surrounding amenities and services fits your needs.

5. Stick to your plan

Understand what your spending limit is and don’t go over it. A pool might be nice, but it is not a necessity. Buying a home is ultimately a compromise of needs versus wants.

Try not to get emotional. In a hot market, bidding wars can be tough on buyers. But you could end up with a whole pile of buyer’s remorse if you think you overpaid.

Or what may look like a lemon. Homes that are in disrepair or need fixing up can usually be purchased for less. Don’t be hung up on the wallpaper, or the fact that the kitchen isn’t pristine.

Use a little imagination. Yes, it’s going to take work, but the savings could be worth it. Because when life gives you lemons, a slap of paint and a trip to the hardware store will Increase housing value like you wouldn’t believe.

6. Buyer agency agreement

Make sure that your agent represents you. A buyer agency agreement helps to reduce conflict of interest since the brokerage represents you exclusively. The seller’s agent represents the vendor.

A buyer’s agent for example, will tell you why you shouldn’t be buying a particular home. Make sure that the guy or gal on your team is batting only for you.

7. Get a home inspection

You wouldn’t buy a used car without checking under the hood, so why buy a house without a home inspection?

A home inspector will check for structural and electrical defects, roofing and foundation problems. This can come back to haunt you later. It also gives you some negotiation room when you put in your offer.

In hot markets, sellers may press to have the inspection waived. Don’t give in and get swept away in the heat of the moment. Walk away.