Welcome to the latest installment of Dear urbaneer, where we assist our clients with housing related queries that have been troubling them. This time around, our client is feeling the frustration that is inherent for many searching for a suitable property in the current Toronto real estate market.
We’ve been at this property search for several months, and are beginning to feel extremely frustrated. We’ve really got our hearts set on owning a detached dwelling, and have a plan in place that has been years in the making, including making sacrifices to amass savings for a down payment and spending hours doing research. Despite this, we can’t seem to buy a home. We’ve engaged in and lost out on bidding wars, including a few heartbreakers. And as the months go by, prices just keep getting higher, stressing us out. Even though we are doing everything right- including being patient, we are at the point where it just seems like it’s not fair. I know that sound a little childish, but that is exactly how we feel. Should we keep going on our housing hunt, or should we just accept our apparent fate?
Still Hopeful for Housing
Here's our response:
First, let me applaud you for your honesty. It’s human nature. We are taught from a very young age that if you follow the rules (the house hunting process) and work hard (be aggressive) then you will reap great rewards (your dream house). The fact that you are repeatedly doing 'a + b', but never reaching 'c' is understandably very frustrating, especially when you compound it with the emotions of house hunting. It’s only natural that you feel like things aren’t fair. You’re doing your part – why isn’t the universe doing its?
In the words of every parent ever: Yes. It’s not fair. But no one said life was fair.
I’m not brushing you aside either. Your feelings are completely valid. But because we care about your well-being as well as the success of your house hunt, it's time to inject some house hunting reality. The reason being is that this reality will bring context to your dilemma. And context will bring both comfort and encouragement to keep on with that house hunt.
It’s all about perception.
Is This Glass Half Empty Or Half Full?
You’ve no doubt heard this famous adage. Truthfully, there is little more sage advice to be had than this piece of wisdom. There is what is there in actual fact; then there is what you perceive – which shapes not only your expectation, but your experience.
The same principle can be applied to a complicated, multi-layered, swiftly-moving Toronto real estate market. Emotions run high frequently; prices escalate while stock dwindles, creating a property pressure cooker. And given the straight up gap between supply and demand (particularly when it comes to single detached homes) there are those that will be chronically disappointed – either from losing out repeatedly from bidding wars or from watching the prices of this particular housing type climb out of reach.
The Benevolent Reality Check
Here's an excellent article from the Huffington Post called “Are Homes Too Expensive Or Are Your Expectations Too High?” which casts a stark, yet supportive light on the hard facts that surround the conditions in the Toronto property market. Ultimately, it all comes down to affordability – that elastic band that ultimately shapes the market, with economic and socio-economic implications.
While affordability will ultimately determine who buys what, there are other, more human elements present, namely expectations around housing – which may be playing into your frustration.
The author, Ben Myers (Senior Vice President, Market Research and Analytics, Fortress Real Developments) writes about the expectations of consumers in general – and in particular around homebuyers near the bottom of the property ladder, desperately wanting to land that coveted single family home. He alludes to the fact that these expectations may be shaped by their housing experience. For instance, he refers to prospective homebuyers whose parents bought a single family home decades ago. They fully expect that they can do the same, despite some vast market differences and despite some surprising economic parallels. Here's a past Dear urbaneer post that addresses this very issue called Dear urbaneer: Interest Rates In The 1980s And Now.
The Huffington post article also refers to a recent report from CAAMP (Canadian Association of Accredited Mortgage Professionals) that asked homebuyers about what they would be willing to compromise on when buying a home. The majority said that they could reduce their lot size, accept a longer commute and a downgrade on interior finishes. Not up for discussion: Proximity to amenities, community itself, property type and size of dwelling.
And herein lies the rub for so many homebuyers, unwilling to relinquish that vision of homeownership, specifically when it comes to an unwavering attachment to size and property type. You’re up against a shortage of stock and a surge in demand for a very specific property type, which not only makes it difficult to find and acquire these properties. And as you’ve alluded to, the prices keep going up – which stretch the bounds of The Affordability Crunch.
And truthfully, if you are already at or near the bounds of your budget, as many are, without a base of affordability to work from, you are always going to fall short in your very specific property search, which is going to make you feel disappointed and frustrated. And affordability isn’t the bad guy who is stomping on your dreams. Affordability is that economic thread that works hard to keep balance, and to prevent you from taking on more than you can manage, which is a good thing. Really it is.
Why do you want to buy a home?
So – what you need to ask yourself, what does home ownership really mean to you? Furthermore, why do you want to buy a home – and most importantly – what does your life look like while you are living there? We ask in this HomeWatch Newsletter What Will Your Home Say About You?
So what is your lure towards home ownership? Is it status? Is it investment? Is it shelter? Is it a chance to establish roots with those you love? Is it somewhere to express your true self? Is owning a home something that you’ve always expected that you’d do because your parents did? Or is it all of these?
And perhaps most importantly, what are you willing to give up to achieve that? Can you still maintain a quality of life that appeals to you? Have you compromised and does it balance out?
What property type (and price point) ticks all of those boxes?
Let’s say you pull out all the stops and Max Out Your House Hunting Budget With CMHC Mortgage Loan Insurance to secure that single family dwelling. Are you house poor? Are you able to access convenient amenities easily? Is carrying all of that debt worth it to you? For a little additional context, here is one of our posts called How Much Profit Should I Expect Climbing The Property Ladder? and another called How Long Does it Take to “Break Even” After I Buy Property? And what about your commute? That is a major factor, which we have explored in The Real Financial, Emotional and Health Costs of Commuting.
On the flip side, if you decide that condominium living is the way you’ll go, can you reconcile your desires that you might have had for a freehold dwelling? Will it balance out? Once you’ve determined what your underlying motivations are for property ownership, you may be open to other possibilities and conversations. Here's a past post called Do I Buy A House Or A Condo?. And if a condominium is a route you're considering, here's some of our past newsletters worth reading including Five Points to Ponder Before Buying a Condominium, How To Evaluate A Condominium, Understanding Condominium Common Element Fees, and Does The Exterior Of A Condominium Influence Value?
As the Huffington Post article points out, it may not be that housing in Toronto is innately unaffordable, it may just be that our expectations around what home ownership actually looks like which needs to shift in order to more accurately reflect the reality of the Toronto housing market.
Think Beyond The Walls
What's most important is not the walls themselves that construct your dwelling, but the quality of life that unfolds there. This has as much to do with connection with community, sense of pride in ownership, convenient access to amenities as it does with the physical configuration of the walls. Here's one of our HomeWatch Newsletters called Chapters of Life: The Value of ‘Home’.
We’re not suggesting that you abandon your house hunt or dash your dreams. It’s about playing Devil’s Advocate to help you do a little housing soul searching – to realize that your housing hunt is not bleak – but still ripe with opportunity. It’s about understanding the market and how to maneuver it most successfully. That said, how you're feeling isn't uncommon. We recently addressed some of these market mechanics and emotional challenges in Why Is The Toronto Real Estate Market So Hot? and What’s Behind This Crazy Toronto Real Estate Market?.
With over two decades of experience at urbaneer, we’ve seen it all – and we’ve provided emotional, intelligent support to many house hunters over the years that are experiencing the highs and lows that Toronto’s property market brings. It’s all about sensitive insight backed up with research, knowledge and tried and true experience, which brings weight to our message.
Can we be of help?
~ Steven and the urbaneer team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-8000
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