Common Misconceptions About Today's Real Estate Market - Bosley Real Estate Ltd., Brokerage

Today, real estate in Ontario is shifting faster than ever. As new trends begin impacting buyers and sellers across the province, plenty of misconceptions have begun floating around.

Our agents work with hundreds of clients every year. When it comes to myths, misinformation and flawed advice from friends or family, we’ve heard it all.

Here’s a look at some of the most common misconceptions today’s buyers and sellers have about the market. Along with clearing up the confusion, we’ve also included a few tips to keep you on the right track towards accomplishing your real estate goals.

Down Payments

As years of high housing costs have kept younger buyers out of the market, many Ontarians today believe that buying a home requires a hard down payment of 20%. In a city like Toronto where the average price of a home is well beyond $1,000,000, many young people are understandably skeptical about their ability to set aside over $200,000 for a down payment in the next decade of their lifetime.

In Ontario, it is possible to buy a home with a down payment of less than 20% depending on the price of the home. Here’s how it works.

If a property is under $1,000,000, buyers are required to make a minimum down payment of 5% on the first 500,000, then a minimum down payment of 10% for the remaining balance of the cost up to $999,999. However, if the total down payment is under 20%, the buyer will be required to purchase CMHC mortgage insurance, which protects the lender should a buyer default on their mortgage.

There are several government programs and initiatives that young buyers can take advantage of to expedite their path to homeownership. The Home Buyers’ Plan (HBP) allows buyers to make tax-free withdrawals from their RRSP to use towards a home or down payment. Additionally, the First-Time Home Buyer Incentive allows buyers to access interest-free financing to use towards their first home purchase.

Looking to become more knowledgeable about real estate in Ontario? Explore these informative articles from our blog.

Market Dynamics

In late 2022, it’s no secret that real estate in Ontario isn’t as fast-paced as it was this time last year. The slower pace of today’s housing market, along with other economic factors has led to the popular assumption that real estate across the province has “crashed” entirely.

In reality, today’s market is actually quite balanced. As many markets across the province – Toronto in particular, have mostly experienced competitive seller-favouring conditions over the past several years, today’s neutral-paced market can look like a drastic slowdown on the surface. So while many buyers are enjoying less competitive conditions, market dynamics haven’t been flipped upside down.

Even in a balanced market, submitting a compelling offer on your dream home requires a strategic approach. Click here to read our blog post about navigating offers in today’s market.

Agent Commissions

While not a new misconception, real estate agent commissions have long been a source of confusion among first-time buyers and sellers. In some instances, uninformed buyers may even avoid working with a real estate agent altogether because they think it will save them money. This isn’t the case.

In Ontario, agent commissions are paid out by the seller. Commissions typically range between 3% and 7% and are calculated based on the final sale price of the home. The total is then divided between the seller’s agent and the buyer’s agent.

Home buyers should always choose to work with an experienced real estate agent. Not only do agents help buyers find properties that are perfectly suited to their needs, but they also provide critical guidance throughout the buying process, minimizing potential risks and pitfalls.

Looking for more seller-oriented resources? Check out these blog posts.

Pricing

With home prices no longer climbing like they used to, many sellers in today’s market assume that the best way to get top dollar for their home is by simply listing it at the highest price possible. In reality, overpricing a home can actually have the opposite effect, creating new setbacks for the seller.

Today, buyers have a healthy volume of inventory to choose from. If your home is listed at a noticeably higher price than similar properties in your area, buyers will look elsewhere. If your home fails to capture the attention of interested buyers, it could end up spending more time on the market than anticipated. This can be a red flag for potential buyers, who may assume that your home isn’t selling due to issues with the property. Stale listings can also attract pesky lowball offers as buyers may think you are desperate. Pricing your home for a successful sale requires a strategic, market-informed approach.