Toronto's new home market struggles: Is now the right time to buy?

How to know if now is a good time to buy a new home

Deciding whether to purchase a new home involves evaluating various factors, including market conditions, personal financial stability and long-term goals. Here are key considerations to help determine if now is the right time for you:

• Interest rates: With the Bank of Canada lowering benchmark interest rates, mortgage rates have become more attractive. Lower rates can reduce monthly payments and the overall cost of borrowing. However, it's essential to assess whether current rates align with your financial situation and long-term plans.
• Housing supply and demand: The recent increase in new listings in the GTA suggests a growing inventory, which could provide more options for buyers. A higher supply may lead to more negotiating power and potentially better deals. Conversely, strong demand, partly driven by population growth, can sustain or increase home prices.
• Affordability: Despite favourable interest rates, high home prices in markets like Toronto continue to challenge affordability. It's crucial to evaluate whether you can comfortably manage mortgage payments alongside other financial obligations. Consider using affordability calculators and consulting with financial advisors to understand your purchasing power.
• Economic outlook: The broader economic environment, including employment stability and income growth, plays a significant role in home-buying decisions. While rate cuts aim to stimulate economic activity, potential buyers should consider job security and future earning potential.
• Personal circumstances: Reflect on your personal and family needs. Are you planning to stay in the home long-term? Do you have sufficient savings for a down payment and emergency funds? Your readiness and life plans are critical in determining the right time to buy.

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The bottom line

While recent developments in the GTA housing market, such as increased sales and new listings, combined with lower interest rates, may create opportunities for prospective buyers, it's essential to conduct a thorough assessment of your financial situation and long-term objectives. Consulting with real estate professionals and financial advisors can provide personalized insights to guide your decision-making process.

Sources

1. Toronto Star: ‘New home buyers are nowhere to be found.’ Toronto-area January new home sales near ‘record low’ despite excessive inventory, falling prices (February 21, 2025)