Cost of Waiting (For Home Buyers "On the Fence" in 2009.
Posted by Justin Havre on Tuesday, March 10th, 2009 at 8:07pm.
Waiting to purchase in Calgary’s Real Estate market can be a good idea… or not. Listening to the news (always negative), waiting can be only a good thing. They say “Save money. Don’t spend”. Doom and gloom. One only knows prices have bottomed when they are higher. When the “Sales” and “good deals” are over and done. Nobody wants to pay full price. Everybody wants a good deal. Yes we are in a recession in Canada – and it is affecting a number of Calgarians (although far less). However, there are other facts that cannot be ignored. Economists project CALGARY (not the rest of Canada) will still have an ok year in ’09. In the Residential Real Estate market: We hear of home values from minus 2% to plus 2% of Dec 31/08 value at Dec 31, 2009. That’s plus or minus 2% of value. On a $400,000 home that 2% is a net difference of plus or minus $8000 on the purchase price. (And we can negotiate the purchase price down that much in this market anyway!!) That is plus or minus $8000 of the equity in your home, which most certainly in Alberta is forecast to go up the following year. Do not confuse equity with cash. Fact: I locked in at 5.9 for 5 years, which is good, but nothing like 4.5%!! Check this out: Fact: So when interest rates go up later this year, which they positively will – what is the cost of waiting? Fact: So, my point is… if you are in a financial position to act this winter or even spring before rates start moving up, you will save substantially in the long run. Like $20,000 towards your principal – not interest! Or keeping the $20,000 in your pocket – depending on how you structure the mortgage. But only if you act in the next very few months! Interest rates have been dropped as an incentive for people to act now – not “in a while”. These low rates will not last long. Finally, late in the year, will we have the inventory to choose from that we have now? Not likely. Right now it’s about the interest rates – more so than slow moving house prices. And one more possible interest rate decline this year – in mid March. Only up from there! Where do you think the price of oil will go this year? And Next? Not including newborns, Calgary's net migration to the city is still forecast for 2009 at about 10,000 people. While low, it is an increase, not flat, or declining,. And with new job shortage in Ontario, will more people come out to Alberta? By buying now, note what you are saving in cash interest payments will easily offset any small variance in market value or short terms equity position. One should always look at real estate as a long term investment and note that real estate has created the most wealth for people.
Justin Havre is the top producing Realtor with CIR Realty, Calgary's Largest Brokerage of more than 700 Realtors. Justin specializes in South West Calgary & North West Calgary Real Estate. Calgary Real Estate is his passion and you may visit our Calgary Real Estate or Calgary Realtor Blog or have Justin Havre paged directly through CIR Realty at 403.294.1500 or contact through this site here
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