What is the price of procrastination currently in real estate?
The real estate market right now is difficult for buyers. The lack of properties to select from, and the competition to buy what is available is making some people think they should just wait until the market is better.
In real estate, waiting can be good for you or bad for you, depending on how different variables change. For example, the interest rate in the United States has started to edge up, and history would tell us that Canada will soon follow the example south of the border. The rate was just increased .25% in the U.S. It may not seem like much, but first, it is a sign that rates are going to increase to some extent, and also, we may not see historically low rates again for some time.
The .25% rate increase on a $250,000 mortgage could mean a difference of $31.84 per month. An increase of 1% could mean a difference of $130.11 per month. Over the term of a mortgage, the increase in payments tend to add up significantly.
If home prices continue to increase at the rate they have over the past year (close to 30% gain in one year), many buyers will be priced out of the market, as incomes are not increasing at a rate that would enable people to meet the extra costs. For example, a $400,000 home in today’s market could be $520,000 in one year’s time, assuming another 30% gain. Today, if you were putting down 10% ($40,000), the $360,000 mortgage would have a monthly payment of approximately $1650.00. The same house with a 30% increase would have a monthly mortgage payment of approximately $2150.00 per month, and the 10% downpayment would be $52,000. Same home, one year later (assuming mortgage rates don’t change). As you can see, the same home can cost you a larger downpayment, and in this example, $500 per month more in a mortgage payment.
If you are ready to buy, and have been waiting for the right time, maybe you should quit waiting!
Call one of our Coldwell Banker Community Professionals representatives and see if now is the right time for you! They will help you look at all the possibilities to ensure you make the right decision.