Ever since the advent of COVID-19, economies and the housing markets all around the world have been metamorphosing at a new level. While these market fluctuations have not always been predictable, there are some observable trends that are important to take into consideration as you determine whether 2023 is the year you should build your custom home in Toronto. Today we’ll highlight a handful of these trends and takeaways to help you make an informed decision. In addition, we’ll provide a brief checklist to help you assess your personal readiness to invest in a custom home.
Ontario Home Values are Rising
Zillow reports that, throughout Ontario as a whole, middle-price tier home values have been steadily on the rise ever since March 2012, when the average Ontario home value was $225k. As of December 2020, that number had risen to $496k. In fact, rather than dipping in value during the pandemic even momentarily, Ontario saw a continued increase of 9.3% in its home values from November 2019 to December 2020, and Zillow forecasts a 10.6% rise in home values by November 30th, 2021. If this prediction pans out, the average value of a middle-price tier home in Ontario would be $542k. In short, home values have been steadily appreciating in Ontario for the last eight years.
Toronto Boasts a Robust Economy
One Livabl_ article quotes Dana Senagama, Senior Specialist at the Canada Mortgage and Housing Corporation, as having remarked that Toronto boasts a “more robust and diverse economy” as compared to the rest of Ontario. Toronto makes up 18.5% of Canada’s GDP, and The Canadian Press reported that October’s 0.4% growth in the real domestic product was the sixth consecutive month of growth, indicating continued hope for the 2023 economy.
Toronto’s economic health is, no doubt, bolstered by a diverse array of industries, some of which remain operational and are even thriving in the midst of the pandemic. Given that home investments generally correspond to a region’s economic health, Toronto may still be a good place to invest despite the economic challenges caused by COVID-19.
Interest Rates are at an All-Time Low
Like many cities, however, Toronto has been affected by virus-related shutdowns; that said, the results of those shutdowns are not entirely unwelcome for prospective home buyers. In some ways, now may be the best time to buy or build because the Bank of Canada has set interest rates for home mortgages at an all-time low to help the housing market continue to remain operational. For those who have been fortunate to retain a steady income, this presents a unique opportunity to invest in their future with highly favourable financing options.
Mortgage Sandbox reported a drop in interest rates from 1.75% in the fourth quarter of 2019 to just 0.25% in the first quarter of 2020. The Bank of Canada intends to keep this rate low for the foreseeable future. In fact, forecasts from National Bank, Desjardins, Scotiabank, TD Bank, Bank of Montreal, and CIBC predict that interest rates will remain at 0.25% from now until the close of 2022, while Royal Bank predicts that interest rates will rise to 0.50% in the third and fourth quarter of 2022. Regardless of what the second half of 2022 holds, interest rates are currently at an all-time low, presenting excellent opportunities for prospective homebuyers seeking to finance their new investments.
Is It the Right Time for You to Build a Custom Home?
Regardless of the movements of the wider Toronto economy and housing market, it’s important to remember that the most important question a prospective homebuyer should ask is, “Is it the right time for me to build my custom home?” To answer this questions, let’s look at the following considerations:
Is Your Financial Situation Stable?
Before you invest in a custom home, you should be reasonably confident that your current financial circumstances are likely to remain stable.
What Are Your Long-Term Goals?
A custom home allows you to infuse your unique personality into a home that is tailor-made for your needs and preferences. If you can’t find a home on the market that suits your vision, then it’s wise to consider building a custom home.
How Does Location Play Into These Goals?
As a general rule of thumb, if you know you’re going to remain in the area for the foreseeable future, it’s a good idea to build a custom home. Assuming you know that Toronto is home, that you desire custom home amenities, and that your resources are in order, then it’s smart to begin investing in your future now.
Is Your Builder of Choice Available?
Most importantly, building a custom home is an incredible journey with an exquisite outcome, but it’s important to remember that your traveling companions make all the difference when it comes to your satisfaction with both the process and the end result. Consider that you have a unique opportunity that should not be discarded when you’re fortunate enough to find alignment with a particular local builder.
Putting it All Together
If building a custom home in Toronto with a respected building partner is your goal, and if you have the resources to invest, then it is the right time for you to build. Markets come and go, and at the end of the day, your decision should be influenced by your personal circumstances and objectives. In other words, now is always the right time to move toward your goals, and if you have the ability to do so, you should.