TEMPTED TO EQUITY UP?

Dear aspiring move-up buyers,

I am addressing those who, as a result of their property's appreciation, have an enviable amount of home equity and are now thinking of using it to finally make a move for the better. Would you be among this cohort?

Perhaps you have been at it for a while, attempting to make your next step up the property ladder. You are probably trying to find a place you can love, not only as much as your current home but even more. It can be quite the challenge, can't it?

No doubt you love many things about your current home. Maybe it's the location, the extra high ceilings, the private rooftop deck, or the new kitchen you renovated to your personal specs - all things you probably don't want to give up. Understood. 

You may also be concerned about becoming house poor at this age and stage, am I right? Maybe you'd prefer to have cash, for the family to travel, to work less, and perhaps even retire early?

Hence the challenge of a move-up buy that is based on home equity as opposed to improved income. It is the dream of having a home that suits your current life better than your current house does, while also not spending much more to get it. With such opposing interests at play it's no wonder your search may feel as though it's against all odds.

When I meet would-be move-up buyers it's obvious they've been feeling pretty stuck. When I question what they are willing to let go of to make their search more successful, I'm first hit with a 'this needs to be a serious improvement or I'm not moving!' look.

So how do you clarify how you might use your home equity wealth to fund a move? Your search can actually be distilled to just four equations, no matter where you live, what kind of market is at play, or whether you're thinking of a move this year or five years from now.

Which equation best reflects your options?

 

Better Location + Better House = Higher Price
Better Location + Lesser House = Higher or Same Price
Lesser Location + Better House = Same or Lesser Price (higher if wayyyyy better)
Lesser Location + Lesser House = Lesser Price

 

If the problem you're looking to solve is location based, it makes sense that you should be prepared to pay up or buy a lesser house. If it's a combination better house while also saving for retirement that you're after, then it follows that you'll be moving to a neighbourhood that is considerably cheaper. If a straight cashing out is what you seek, then downsizing or moving out of town altogether will be the foundation of your search.

Awareness of the equation you're working within, based on the primary problem you're looking to solve, will go a long way to making your home search more successful. You're much more likely to be ready at the next opportunity, having already considered and accepted the compromises you're willing to make to move.

Now, If you look at these equations and can accept none of the above, that's okay too. At least then you'll be clear on why you've chosen instead to suck it up and stay put. Acceptance of your home without attempting to change it or protest it, can have its own obvious merits too. :-)

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ABSENCE MAKES THE HEART GROW FONDER?

For those of you who actually read my blog ... you may have noticed that I've been missing in action recently.

May I go ahead and blame that on the market too?

Seriously though, when in the trenches of an all out assault on housing in this city, it's been tough for me, if not impossible, to back away long and far enough to reflect and write with any sort of coherence about what is happening.

In a nutshell?

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WHAT REAL ESTATE INVESTING IN TORONTO IS NOT

I helped a couple of enterprising millennials buy their first investment property in Toronto last week. They are a great example for other would-be, independent investors to learn from. I'll be presenting their story as a case study but before I do, I wanted to take a step back to look at what real estate investing in Toronto is not.

Since investment opportunities are locally specific and ever shifting, many of the age old or more general rules simply don't apply to Toronto investing today. The millennials I worked with were well aware of that. Are you? If you're entertaining the idea of an investment property, it may be helpful to break down a few of the more common assumptions before you begin.

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Your Comfort Zone Versus Your Safety Zone

For those wanting to move up the property ladder in Toronto here is a suggestion: unpack your things and stay home. As you know, the market is too tight, too expensive and too fast for you to move anyway.

Well... I don't actually see it that way but I'm pretty sure that you do. The truth is, your want to make a move just isn't enough of a motivation to leap into the expensive unknown of a new house. This market is reserved for those who are beyond want. They've decided that they have to move and they don't change their minds about it. The home buyer today seeks long term safety at the expense of current comfort. So if feeling at all comfortable is what you're after in a process that is highly competitive and bound to cost you more than you had hoped, you're best to stay home. There are people moving in this city, and contrary to what you may assume, it's not only stealthy wealthy ones who are doing so. They are the ones brave enough to occupy the space between comfort and safety and who've chosen to be uncomfortable for the time being.

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Market Patterns - They do exist, can be predicted (and have nothing to do with ask price)

While I can’t give you details on any one deal – it’s confidential stuff - I do see clear patterns across many deals ... patterns that may interest you. My buyers are often surprised when I tell them we can predict within range, what a property will likely go for and that it has nothing to do with ask price. Here's what you need to know about market patterns and how to effectively predict them - useful stuff for sellers and buyers both.

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5 Reflections for Buyers

When reading yesterday about Maria Popova's reflections as a blog writer, I couldn't help but be struck by how closely they apply to my advice for real estate buyers - the ones who dare to dream and do battle in Toronto's real estate bid war trenches, where few mere mortals dare to tread.

Admittedly based on Popova's reflections, here are 5 parallel thoughts I stand by for buyers. This goes out to them, to keep in their back pockets, as they attempt to navigate Toronto's highly competitive and often confusing market. 

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With The Spring Season Almost Behind Us, Let's Take Stock.

Yes, Toronto’s record-breaking streak of real estate sales continues...

Homes are selling today for 15.7 per cent more than they did in May 2015.

The Toronto Real Estate Board’s (TREB) latest monthly statistics showed Toronto home prices increased $64,262 on average to $782,051.

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The Long Game of Excellence

As a full time Realtor, I also devote time each week to coaching other Realtors who seek to be great at what they do, thanks to my coaching collaboration with Suze Cumming of The Nature of Real Estate. 

Her recent blog post entitled 'The Long Game of Excellence', conveys well the values I hold as a sales professional so I've included it below word for word. It describes how I see myself managing for my clients, the intersection of a complex housing market with the very real human psychology of major life choices.

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