Wow! What a headline. This was the title of an article in Business Week recently (http://www.businessweek.com/lifestyle/content/dec2009/bw2009127_753974.htm). The title was designed to grab attention but some people may have been put off by the opening line.
It's a great article that talks about the facts of buying a home and that now maybe the the best time to do so. It's an American article so the numbers are off a little compared to the Canadian markets but the principles discussed still apply to our market.
Predictions for the Canadian mortgage market are that interest rates will rise in the next 12-18 months, house prices in Ottawa are predicted to continue to rise and the cost of buying a home will increase next year with the introduction of HST (increased costs for legal, home inspections, real estate commission and home repairs/upgrades).
Putting an Ottawa perspective gives us the following numbers:
Current best rates are 3.89% for a 5 year fixed rate.
Currently, the average price of a home in Ottawa is $313,370. Assuming a 25% down payment your monthly mortgage cost would be $1,222.32 at today's rate.
Assume a 3% (conservative number) increase in value of homes in Ottawa in 12 months the average house will cost $322,771. and with 25% down the monthly mortgage payments would be $1,258.99 at today's rates.
If we add a 2% increase to mortgage rate and the monthly payment becomes $1,533.04 . This increased rate will also increase the interest costs on the mortgage substantially for the life of the mortgage.
This is just the direct costs now take into consideration that house prices could easily increase by more than 3% (last 12 months the increase was 4.4%), that the cost to buy a home will increase on July 1st due to the HST, and that mortgage rates could increase by more than 2%, and clearly now is an excellent time to buy a home.
If you have been thinking about it doon't put it off do it now. If you are a first time home buyer now could be the time to get onto the property ladder before it becomes to expensive, moving up take advantage of the lower rates and if you are downsizing there will be more buyers in the marketplace so your home should sell more quickly and for a high price.
Need more details or want to discuss this with someone call me and I can arrange a personal consultation with you, myself and Matt Daniels (TMG - Mortgage Broker, firstname.lastname@example.org). Matt provided me with the financial numbers for this blog and will show you how now could be the right time for you too.
As my mentor always told me "Don't wait to buy real estate, buy real estate and wait".