A frequently asked question we receive is "When is the best time to buy?" The simple answer is ... YESTERDAY!
Over the last 5 years, analysts have predicted a major market correction in Canada and yet, prices continue to rise. Those who listened, are now hundreds of thousands of dollars behind based on the amount of appreciation an average home has seen.
In order to have a larger down payment, many buyers continue to save. All-the-while, homes they could afford have quickly exceeded their reach, forcing them to settle for something smaller or renting. Based on current market trends, our personal opinion is that you're better to buy today with a smaller down payment than having a slightly larger down payment and buying into a more expensive market 6 months from now.
Perhaps you're trying to save 20% to put down on your first home to avoid the additional cost of mortgage insurance; let's assume you're buying a $400,000 home and have already put aside $60,000. Let's also assume that you and a friend or spouse are combining your savings for the purchase and are able to put aside a total of $500 per week. Based on this you'll have the full 20% in 40 weeks. It's likely that the occasional unexpected expense will occur forcing you to skip a week of savings on occasion. Considering everything, it will take roughly 1 year to get you to the full savings required to avoid the insurance.
The total cost of mortgage insurance on a home purchased for $400,000, with a down payment of 15%, is $6120.00. The average appreciation of a home in the last 12 months is approximately 13% - or $52,000 on a $400,000 home.
There are many other calculations to consider such as the additional monthly cost on your mortgage when purchasing at the higher price point and the affordable interest rates available today, which may not be as attractive down the road.
For more information about buying a home, whether your considering to move in a month or in a year, call us today to chat. It's never too early to get things started and we're happy to help.
Call or text us today:
Ariel: (647) 464-0957
Adrian: (416) 707-8401
The Kormendy Trott Team
Ariel Kormendy | Adrian Trott
Century 21 Miller Real Estate Ltd., Brokerage