My earlier blog post I asked you 4 questions and to email me your thoughts. http://www.century21.ca/patrick.galesloot/Blog/2008_Red_Deer_Real_Estate_Market
- Where do you see house prices going long term?
- How long do you plane to live in that house?
- Should you wait?
- Can you afford to wait to buy based on past price trends?
In follow up I received comments that got me thinking some more about the questions and the responses. The response was a definitive "YES" real estate values will go up long term, but overall people are apprehensive about doing so in a "down" market.
There are different factors influencing your decision to buy and sell.
If you are a first time home buyer the numbers speak for themselves in my opinion. Long-term, home ownership is the way to go. Look at Grandma's house. Grandma paid less for her house than you pay for a car these days in many areas. Grandma is probably mortgage free by now and accumulated hundreds of thousands of dollars along the way. If grandma were to sell today and have a handful of cash that cash, from her personal residence, is tax free. The single largest tax break for most Canadians is that we do not get taxed on capital gains on our personal residence.
So should you be trading up today? Absolutely! Increasing the size of your home and its value should be part of your retirement strategy. When you are 65 and ready to downsize into a 1 bedroom condo and a motor home, you could benefit from the same equity gains as grandma has.
Can you afford to do so? It is best to consult your Realtor and your mortgage specialist.
- Do you have enough equity built up to leverage to trade up?
- How much equity do you have today?
You Need a Current Market Evaluation of your home. A great Realtor will help you analyze your situation and advise you of your options.
Marc, wrote in and told me about his Realtor. Marc's Realtor advised him of the situation, the market conditions and looked at heir equity position together and determined no you should stay put. Put that desire for a bigger home on hold for now. This is Lyle (click here), Marc's Realtor, Lyle is a great Realtor and part of the Century 21 Advantage team.
Marc states "We have been married for 6 years and have lived in 3 different homes as we have moved up the property ladder (duplex to house to bigger house) so we are not afraid to move if we see something that would suit our needs better or more potential equity...until now." Awesome Marc!! This illustrates my earlier remark about increasing the value of your personal residence. Not only does it benefit your changes in your family (adding kids etc...) but he is also increasing his long term equity. That starter condo and duplex may not still be a starter home in 25 years and at starter home prices for that market time frame. What are you doing to increase your wealth?
Marc and his family are becoming more common. In fact this summer I was working with a young couple who were buying their first home. They were hoping to buy with "zero" down, and were in somewhat of a rush to do so before "zero down" was no longer an option for them. When I asked ,"how long do you plan to live here?", the response was "one year". I had to inform them that they will not be able to move in one year. That there will be large costs incurred if they do, and that they may not have any equity to make a move in one year. They had better find a home that fit them for longer.
I believe many of us Realtors would do the same. It COSTS money to move. There are a lot of components in that selling or buying decision. Make an educated decision. Talk to your Realtor, if you don't have one use some of the tips and guidelines you find here when selecting. The more you view your Realtor as a consultant in your real estate decisions and less as a sales person the more we can help. Develop a relationship with your Realtor and open up about your real estate goals. The more we know the more we can help. If now is wrong a great Realtor will not be afraid to say "Mr and Mrs Seller, you should stay where you are for a while longer, I'd love to sell you a new home but now may not be the best time for your financial situation". Your Realtor works for you.
- What influences your buying decision?
- If you are trading up the ladder, is now the ideal time for you?
Which brings me to a question from last week:
- Can YOU afford to wait to buy based on past/historical price trends?
Now may be the best time to buy for you, and it may not. Talk to your Realtor, and be informed. The best decisions are the informed decisions. Buying can be highly emotional, selling is where you need to have those emotions more in check and have a grounded look at your situation. Remember your home is not fixed in the real estate market. What I mean by that is as the Red Deer real estate market goes up so does your home's market value, and as the real estate market declines so does your home's market value. Waiting to buy so it is better to sell, puts you in a more expensive time to buy. Agree or Disagree? Email me your thoughts or opinoins. Comment functionality for the Century 21 Blog is coming in the future until then, use old school email. Thanks.
Your Friend in Real Estate,