In this hot market, should I buy now or wait?

 
Here are some things to consider to make the decision making a little easier

 
April 2021   4 min read

Have you ever made a pros and cons list when deciding on something? If you’re looking to buy a home in this hot real estate market, now’s a good time to bust out the list making skills.

Along with your personal situation and unique needs (both present and future), make sure you also consider these pros and cons for each scenario: 

Buy now pros:

The interest rate for lending is extremely low. We’re talking historically, never-before-seen kind of rates. The Bank of Canada also projects that rates should remain that way (possibly for the next two years) to help with economic recovery. Low rates mean savings for you.

You become a Home. Owner(!) Say goodbye to the rental market and the risks that come with it (like rent increases, less-than-stellar landlords, or having your space sold right from under you).

You’ll be securing one of life’s biggest assets – a home. This gives you the ability to start building up an awesome money-making thing called equity (the difference between your home’s value and the debt you owe on it). Tapping into your home’s equity down the road can help you meet future needs like a new roof, landscaping, or a home reno. 

Buy now cons:

FOMO can get in the way. With demand outpacing inventory and bidding wars on almost every sale, people are vulnerable to some rash decision making. This could land you something you didn’t wholeheartedly want, or something that might not fit future needs (like being near a school or having a large yard).

The old “house rich, cash poor” adage. Let’s face it — homes these days are expensive. Having a hefty mortgage could affect your ability to take are care of other financial health needs, like paying down debt or saving for retirement. High mortgage payments can also limit other fun things (buying a boat or going on vacation might not be so feasible anymore). 

Wait it out pros:

Time is now on your side! This plays out in two significant ways:

  1. Now you have the breathing room to find something you can truly call a home, one that you’ll want and love for the long-term.
  2. You have more time to save towards your down payment. If you’ll be requiring mortgage loan insurance, having a good chunk of cash for a down payment reduces the premium you pay (which also means less of a mortgage payment).

Wait it out cons:

This could take a while…Even if you put house buying on pause, it’s still important to keep tabs on things, including your mortgage preapproval and your mortgage rate guarantee (both can expire). You should also keep in touch with your realtor and continue with your research just in case. One other thing—how long do you wait for the “perfect home?” And is this worth missing out on the chance to get into the housing market and make some equity?

Prices are climbing higher and higher. Vancouver Island is experiencing the lowest homes-for-sale inventory on record, making for a true sellers’ market. And the British Columbia Real Estate Association does not see the inventory situation improving any time soon. This has resulted in the benchmark price for a home soaring like never before. It’s hard to say when prices will go down. Some experts speculate that it’ll only be with the building of lots more new homes — and that could take years.

So you’ve come to the end of our article. We bet you were reading it closely for a magic answer as to what to do—either buy now or wait. The truth is, there is no magic answer. It all comes down to what factors are going to tip the scale in one direction or another for you. But you don’t have to go this alone. In fact, connecting with a mortgage expert can help provide some objective clarity on when and how to buy a home.  Reach out to someone who knows your neighbourhood market well and is skilled in getting you the right kind of financing for your unique situation. It’ll be worth it, considering what’s at stake…


Other topics to explore:

 Getting ahead in the home-buying game

 How much will my home really cost?

 Withdrawing from your TFSA or RRSP

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