Should I Buy Real Estate At The Top Of The Market?

How will you know a good house when you see it? What if you buy a house and can’t sell the one you own? How can you make sure you are making a good investment? What if you think you paid too much and home prices drop?

After years of hefty home-price appreciations, it’s natural to wonder how long the good times will last. Real estate markets are cyclical: prices go up and they go down. However, over the long term in this country, prices have tended to move higher. At the end of the 1970s, after a big run up in home prices, real estate agents had a hard time believing that prices could go any higher. The market did cool in the early 1980s. But today home prices are much higher than they were in the early 80’s.

HOUSE HUNTING TIP: To protect yourself when you buy a home, adopt a long-range horizon. Don’t buy unless you plan to hold the property for at least 5-10 years. This way you can ride out any downturns in the market and sell when the market improves. Try to avoid getting into a situation where you are forced to sell in a down market. If you have any questions about how long you’ll be staying in the area, postpone your buying plans until there’s more certainty in your life.

For the buy and hold strategy to work you need to make sure that the home you buy will suit your long-term needs. This usually means: don’t buy a home that’s too small. Many first-time buyers make the mistake of buying a tiny starter home because it’s charming and it’s in the right neighborhood. But, two bedrooms, one bath and a postage-stamp lot doesn’t leave much room for growth.

A better strategy to consider might be to buy on the outskirts of a prime neighborhood where you can buy a 3-bedroom, 2-bath home for the approximately the same price. You might not have the most prestigious address today, but you could experience good appreciation, which will finance your trade-up move. And, you’ll be comfortable in the mean time.

Some floor plans are better than others. Ideally, there should be good flow between the rooms. A home with a central hall that leads to many rooms usually is easier to live in, and often times more saleable when the time comes to sell. Considering central hall layouts rather than layouts that ramble; where you have to pass through rooms to reach other rooms. A home with indoor-outdoor living space makes a big difference. A deck or patio off the kitchen, family room or separate dining room provides additional usable space and makes the home feel larger.

Some buyers put off their home buying plans for fear that the real estate market will fall. This seemingly sane strategy can be risky if prices don’t drop. You could be kicking yourself next year when you haven’t bought and home prices are further out of reach.

THE CLOSING: Remember, there is usually no need to rush to buy in a market that’s loaded with inventory, particularly if new housing developments are in the works near the home you are planning to buy. An over-supply of housing relative to buyer demand (supply and demand theory) puts a downward pressure on home prices.

For more information on Home Buying or Selling Tips, Please contact Liisa Arra, broker, at 416-487-5131 or email We would be pleased to help you.

Liisa sells real estate in the Toronto areas of Davisville, leaside, and downtown condos as well ast North York neighbourhoods of York Mills, Willowdale, and Lansing.

Should I Buy Real Estate At The Top Of The Market?