Should I wait to buy a home? Should I put off my purchase?
If you have done your homework, that is, youâ€™ve researched the purchase cost and ownership costs and you are satisfied you can afford both, then, I would say that itâ€™s OK and maybe even more than OK to proceed with your purchase decision.
In fact, it may very well be in your best interests to take that step. Let me explain.
An advantage of buying now versus continuing to rent is that you start contributing to your equity immediately rather than continuing to finance your landlordâ€™s retirement.
Your mortgage pay down could be as much as $12,000 in the first year on a $400,000 mortgage. And in each ownership year, that number increases. Why give all that hard earned money to your landlord? How long do you want to keep doing that?
Buying in the winter typically means you have less competition from other buyers. You may even be able to negotiate a more favourable price and/or better terms compared to competing with more buyers in the spring.
Interest rates are at an all time low. Why not take advantage of these record low rates? I would consider a three-year or a five-year closed mortgage. I feel rates are more likely to increase over the next year than decrease.
The other reason you may want to buy now is that you are likely to find a home that better suits your needs and better suits being at home compared to where you currently live. Maybe your purchase will have more space, a home office, an exercise room, a better neighbourhood with a great walk score, a short walk to nature â€” if thatâ€™s your thing.
Reflect on what is important to you, what aligns with your values, your best life and go get it.
And while we are not visiting or going out, you could put some effort into adding equity by improving your home. Maybe you could do some painting or other renovations. There is no advantage to doing that to your landlordâ€™s home, why would you?
Getting settled and having a home base that is truly yours can be very comforting and improve your quality of life immediately. Make it your castle, however humble it may be. This is now your space to unleash your inner hidden creative talent.
Job security may be a consideration. Letâ€™s say worst case scenario happens and you lose your job. When I purchased my first home in 1992, I was laid off just before possession. I was a consultant â€” there was no employment insurance, no safety net.
That was a scary time for me. Initially I was very concerned. I pivoted. I rented my home, which easily covered my expenses and then some. I then had an investment property. That wasnâ€™t the plan; it was a happy accident. Someone else was paying down my mortgage. I ended up getting a new job a couple of months later, but it was two hours away. It actually worked out very well.
When the virus spread in March, I was concerned about home values decreasing. Obviously, that did not happen. In fact, we saw sellerâ€™s markets in our region placing upward pressure on prices in certain property types. Many other markets like Toronto, Montreal and Ottawa saw significant price increases in single family homes.
Our government will pull out every stop to protect housing. They implemented policy that brought interest rates to record low levels. Homes immediately became significantly more affordable without the sale price changing at all as the cost of our homes is directly correlated to the cost of our mortgage payment.
The billions of dollars of support for businesses, and those negatively impacted by the shut downs, provided stability in the real estate market. As I see it, these measures prevented a price correction.
It transmuted a housing correction into a 25-year period of slightly reduced value growth as our disposable income will be affected while we service and pay back our now larger national and provincial debts.
This may, in fact, also be a good time for investors to acquire property. That could be you, one does not need a college degree to be an investor. Not everyone is going to read this article and become a home owner.
Letâ€™s look at what has been happening. Alberta has seen property values decrease over the past six years while most all other major centres in Canada have seen significant growth.
A gap exists that we havenâ€™t seen in decades. Opportunities are found in the â€œgaps.â€
There may be a significant wealth generating opportunity for those that have the gumption to boldly more forward. Alberta could see the fastest growth in real estate values in the next 10 years compared to any other region in Canada.
We are so much more than oil. We have significant opportunities in electric vehicle battery production and hydrogen fuel cell production.
It will take time to transition from fossil fuels. As many big oil companies divest into renewable energy â€” away from oil and gas exploration and development of oil reserves â€” we may yet see another spike in oil prices.
My advice to you, if you decide to take this step, is find yourself a consultant, a realtor, someone you can trust. There are many great realtors out there who love nothing more than to help you to make your best move.
And please take all precautions. Research thoroughly and pick your top three homes to view, use the virtual tours on realtor.ca. Wear a mask, social distance, sanitize and minimize touch.vI insist on all of these, the more layers the better. You may not find your perfect home in your Top 3, but please try to.
If youâ€™re listing your home, there is a way to do this without ever meeting your realtor in person.
We will walk alongside you â€” six feet or more apart â€” protecting your interests and guiding you to find and acquire the right â€œcastleâ€ in which to live your best life.
Dennis Faulkner is a realtor with Re/Max Select and holds a degree in economics. He can be contacted with all your real estate questions at firstname.lastname@example.org.