Now is the time to buy

There has been a lot of pessimistic news lately and some people are confused whether this is a good time to buy Real Estate or hold off until the Financial Markets improve or the news get better. Sometimes these decisions are not based on facts but a reaction to all the negative press and the lack of public confidence. If we can predict the bottom of the market with accuracy this would be great, however not many people have been great at predicting the bottom of a market much less the top. So what do you do when it comes to buying real estate, do you buy now or hold off?  

Many experts believe that in Ontario we have moved to a buyer’s market, where there are more sellers than buyers. As this occurs prices tend to be lower as the buyers have a better selection and sellers are more willing to negotiate the price. In certain parts of Ontario we have seen a noticeable decrease in the average selling price.

Some people confuse this statistic with thinking that prices have come down, when in reality it may mean that the higher price homes are not selling but the lower priced ones are thereby bringing down the average sale price. In Waterloo Region we have noticed a slight drop in home prices for properties valued lower than $300,000 of about 5%.

The time to buy real estate is when more people are selling. If you hold off making a decision to buy when the market turns around then there will be more competition and prices tend to be higher (supply and demand). Furthermore, most people that buy homes require mortgage financing. With the average 5 year interest offered by Mortgage brokers coming down from 5.80% to 3.90% or less, the cost of carrying a mortgage has come down considerably. 

This means that by comparing buying now vs. buying in the fall of 2008, the average $300,000 home has come down by $15,000 but the interest savings on a 5% down mortgage would have come down approximately $27,000 over 5 yrs. This translates to a total savings of about $42,000 when you add up the interest savings over 5 yrs and the reduced price compared to last fall.

So what does this all mean? Well the time to buy is now! If you wait until the market improves to buy then chances are many buyers will also enter into the market thereby creating more competition and raising prices. Also consider when the markets improve the Bank of Canada will raise interest rates to keep inflation in check thereby increasing financing costs which will reduce your buying power. Interest rates are at an all time low and they can only go one way and that is higher.

 

Still not convinced as you are worried about your job? Those of you that are renting right now and paying $1,300 per month in rent can buy a home valued at $250K and have the same payments as you are paying for rent. If you lost your job and you were renting you would still have to pay rent, so the risk is the same!

In Waterloo Region the First Time Home Buyers market has been brisk and many First Time Buyers are taking advantage of this opportunity to get into their first home.

For those people in existing homes that are thinking of moving up, now is the time to sell because even though your home is worth less than it was a few months ago. It may be smarter to sell now and upgrade as the more expensive properties have come down even further and those sellers are more negotiable.

There are no comments

Thank you! Your comment has been submitted and is awaiting approval.

Blog Archives

Tags