Friday, April 13, 2012

When is a good time to buy a house?

A recent RBC survey found that Canadians are conflicted about whether to purchase a home this year. While a majority believes it is the right time, more than 70 per cent say they will hold off.

The likely reason is, again, conflicting messages in the media. Headlines warn that Canadians are still taking on too much debt; that the condo market in Toronto and Vancouver is slowing down; that interest rates are set to rise; that the market is softening; and that we’re still in a housing bubble. On top of that there are rumblings of inflation going up, the price of gas is up, and the jobs situation is still somewhat precarious. So what is a home buyer to do?

Decide whether you want to buy a house, if you have the means to buy a house, and then go out a find one. The most important factor is your personal readiness.  A home is a long term investment and its value will fluctuate up and down over the course of your tenure in it. It is both a commitment and an achievement that reflects your aspirations and lifestyle, and offers a great deal of personal satisfaction, as well as financial stability.

There is no good or bad time to purchase. Mortgage rates and house prices will fluctuate but over the long term, home ownership is a sound investment that compares well with other investments. When you invest in mutual funds, the mantra for most is buy and hold. Similarly, your home is a buy and hold investment.

If we examine the current situation we find historic low interest rates, a housing market where the prices in most markets are stabilizing, a healthy economy that is growing and an inflation rate that is holding steady, thanks to the fiscal policies of our government. So, the sooner you get into your new home, the sooner you will begin to build equity and reap the financial rewards, as well as the personal ones.

Ask yourself:
  • Are you at the point in your life where the idea of homeownership is attractive and makes sense, both now and for the long term? 
  •  Do you qualify for a mortgage, and how much? If you don’t know, talk to a mortgage professional.
  •  Can you manage the mortgage payments as well as other expenses that may come along with homeownership, such as maintenance costs and higher insurance fees?
  •  Do you have a down payment?
  •  Do you have a strategy to take advantage of this low interest rate environment to more aggressively pay down your mortgage and accumulate equity?
If you answered yes, then start to explore your options; find out what’s available and what’s involved. It’s the right time to buy.

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