# Buying up in a down market!

Have you been waiting for a time when home ownership would become affordable again? Now is that time! With housing prices as low as they are, it is now easier for the renters who always wanted to buy, for the young couple in the townhouse or condo that have been waiting to buy the larger house with a great yard, or for the family who have always wanted to afford a cottage....now is the time! For those of you discouraged with the down turn in the real estate market, fret no more! I will outline for you how buying now makes perfect economic sense.

Let's say that the market has decreased the value of homes by 10%. You are currently living in a condo/townhouse that was valued at \$180,000 2 years ago. You have always wanted the bigger, detached house with a yard for the kids to play, but the value drop of 10% has now placed your lovely property at a new value of \$162,000. TERRIBLE!..or is it? Well, consider this. If your property has dropped 10%in value, so would the value of your next property. If \$400,000 was the maximum your family was willing to spend for the purchase of your next property, and considering the 10% reduction in value, a house that was worth \$420,000 2 years ago has now come down well within your budget at a very affordable \$378,000! To analyse this further, look at the savings in value by buying in the down market.

Current home net difference = \$180,000 - \$162,000 = \$18,000
Future home net difference = \$420,000 - \$378,000 = \$42,000
Total net difference = \$24,000

By moving up now, you are saving yourself \$24,000 in value than if you would have bought at the peak of the market.

Many people have said they want to wait until the market bottoms out before they buy. Please consider that the bottom of the market is not an absolute position, but rather a relative position to a rising market. The only time you will know the market has bottomed out is when it begins to rise again. This is reason in itself to buy before the market begins to go up. You must also consider certain economic activities that occur in a market that is sloping downward, as opposed to a market that has reached bottom and has begun to move back in an upward direction. In a downward market, interest rates tend to be lower in attempts to stimulate activity, housing inventory is abundant, bidding wars are uncommon making for a more relaxed home shopping experience and you get to live in your dream home sooner! As the market turns and begins to rise, interest rates start to rise with it. More buyers come back on the market, creating more completion, reducing the amount of available housing while driving up the prices.