How Long Should You Wait?

NZ-house-Prices

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.

Thinking of Buying a Home? 3 Questions Every Buyer Should Answer First

house 4 sale

If you are thinking about buying a home, you are likely getting lots of advice from friends and family. They no doubt have your best interests at heart, but there are three questions you should ask yourself to decide if NOW is the right time.

 

 

1. Why am I buying a home in the first place?

This is the most important question you should ask yourself, as if will determine if you should be buying, and if so, what is most important to you in your home buying process. Financing doesn’t matter if you don’t know what you really need.
Many studies have been conducted, and 4 major reasons consistently turn up. These reasons are:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What does it mean to you to own a home? What benefits will moving provide you with?

Once you have answered this question…

2. Where are home values headed?
Canada Mortgage and Housing Corporation’s outlook for 2016 indicates that the Hamilton-Burlington area will experience a moderate price increase this year. This area is an exception to the general expectation that prices will cool across Canada. For an in-depth review of the local market, be sure to speak to your REALTOR®

3. Where are mortgage interest rates headed?
A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates. If you have been watching the news lately, you will notice that a couple of the large banks have already increased their mortgage rates. While the increases are small, and likely will have a small impact on affordability, you should ensure that your financing plans consider the possibility that rates may increase over the next few years, as that could affect the affordability of your mortgage payment when your current mortgage comes up for renewal.

Bottom Line
Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

Be sure to speak with one of our real estate Professionals. They will advise you on the current market conditions, and help you make an informed decision.