Eight buying tips as Canada waits for rebound

Industry data shows buyers oversee the property market, unsure how the latest cut in interest rate will affect prices against a backdrop of economic challenges.

Savvy buyers are already on the move, convinced values will rebound as the cost of mortgages falls.

It’s generally accepted that any central bank needs to cut rates by 1% to convince buyers to change their cautious behaviour.

Pundits reading the financial world’s tea leaves are convinced the Bank of Canada will cut even deeper into 2025. As a result, savvy buyers are active now, determined to strike a deal before property values rise due to cheaper access to loans.

Affordability is still an issue, but these buyers believe the short-term pain of today’s 4.25% mortgage rate will be worth the discount of buying at today’s prices.

We are already seeing this trend emerge.

The Royal Bank of Canada (RBC) reports that home resales were up 1.3% between July and August. Inventories are growing, too—they’re double the level of 2021.

And the MLS Home Price Index remains steady at $717,000, a 3.9% decline from 12 months ago.

The biggest unknown is the state of our economy, primarily as job security significantly influences property market confidence.

RBC said in a recent report that the labour market was “softening at a pace and magnitude consistent with prior recessions.”

However, it added that 80% of the rise in unemployment has come disproportionately from students and new graduates. So, the jobless rate of 6.6% is slightly misleading.

Here’s how to respond to today’s market as a buyer:

• Prioritise Search: The market moves quickly, and buyers wanting to capitalize on the current situation know they don’t have months to hang around. Focus on your target areas and the type and size of property you desire.
• Cash is king. Get your finances in order. Get a pre-approved mortgage so you can make offers with confidence.
• Talk to Agents: Demonstrate to an agent that you’re aware of the market’s current status. This signals that you’re an informed and serious buyer.
• Don’t Rush: The window of opportunity won’t last forever, but never rush into a decision. Don’t let FOMO (fear of missing out) sway your judgment.
• Due Diligence: There’s no excuse for skipping essential steps in the buying process. Always order a building inspection.
• Start Negotiating: Be ready to act decisively. Your research will give you a firm idea of the home’s value. If you’re serious about a deal, don’t low-ball. Make an offer and justify how you came to that number. Leave cash in reserve in case you need to give a little ground.
• Juggling Act: If you find more than one dream property, negotiate on multiple fronts. No rule says you can only focus on one property at a time.
• Extra Care: Always insist on conditions as part of your deal. These would include the property passing a building inspection and your ability to obtain the necessary finance.