Introduction
Toronto’s real estate market is in an interesting phase right now. With 3-year fixed mortgage rates recently dropping to 4.5% and home prices falling by 10%, you might be wondering what this means for you as a buyer.
Should you jump into the market now or wait? And should you lock in a fixed mortgage rate or consider other options?
The Drop in Fixed Mortgage Rates
Recently, fixed mortgage rates for a 3-year term have plummeted. Just a short while ago, a 3-year fixed mortgage rate was around 5.25%. At that rate, a $3,950 monthly mortgage payment would have only qualified you for a $900,000 home.
But with today’s lower 3-year fixed mortgage rates close to 4.5%, that same payment can now secure you a $1,000,000 home—a significant boost in buying power!
Current State of Toronto Home Prices
Despite the drop in mortgage rates, Toronto’s housing market hasn’t adjusted to the new reality yet. Home prices have decreased by 10% from May to July.
This disconnect between falling mortgage rates and dropping home prices is unusual, and an adjustment is likely to occur. However, timing this shift is tricky, and such opportunities don’t last forever.
Fixed vs. Variable Mortgage Rates
With fixed rates now at 4.5%, you might be tempted to lock in. But is this the best move?
According to projections from major banks, variable rates could potentially outperform fixed rates over a 3-year period. Opting for a variable rate might be appealing if rates continue to fall, but it’s not a straightforward decision.
Fixed rates offer the advantage of stability and can qualify you for a larger mortgage, which is especially valuable in a competitive market like Toronto. Additionally, locking in a fixed rate provides peace of mind. If you need more funds later, refinancing remains an option.
Opportunities in Toronto’s Real Estate Market
The combination of lower home prices and reduced mortgage rates creates a unique opportunity in the Toronto real estate market. Lower prices and mortgage rates enhance cash flows on investments, making it an opportune time to secure a property. Keep in mind, however, that these opportunities are fleeting, and the market is always evolving.
Toronto is making it easier to invest in low-rise properties. Recent changes include the ability to:
- Convert single-family homes into four units as of right
- Waived development fees, saving up to $250,000
- Parking requirements are being removed
- Height restrictions are becoming more flexible
- Single exits for buildings up to four storeys may soon be permitted, reducing construction costs.
These updates make it an excellent time to invest in the low-rise market in Toronto.
How We Can Help
Thinking about investing in a multiplex for rentals? We’re here to make the process seamless. Whether you’re buying or building, our real estate sales brokerage specialises in investment properties and multiplexes in Toronto.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll support you through the whole process.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
