Introducing Rebecca Awram, our preferred Mortgage Broker at Westminster Plateau, who uses her 20 years of experience to answer your questions on why NOW is a good time to buy.*
Q: Is now a good time to buy?
A: First of all, if you’re paying rent, it’s always a good time to buy. But of course, there is a lot of uncertainty out there, and I would think that most people are looking for a deeper answer than that.
Buy low, sell high. Words of wisdom for investments, real estate and other assets. The problem is, what is considered “low”, as it’s a relative term. Many people are waiting for the bottom of the market in real estate, but unfortunately, we don’t know what that is, until it is behind us. I can say with confidence that here locally, the statistics would indicate that we are either in or very close to the bottom of the market. Price declines have levelled off, and in some markets, activity has even started to pick up, especially in the more-affordable price points of Condos and Townhomes. Don’t depend on newspaper headlines; have your realtor provide market statistics for you for the neighbourhood you are considering.
We are also not creating any new land in the Lower Mainland, yet 100,000 people flooded into BC this year, and 2023 will be another record-breaker. Scarcity means that buying almost anything, should result in capital gains well above inflation over a long-term holding timeframe. It doesn’t have to be in a name-brand location as long as it has basic appeal. This simple formula has been making accidental millionaires in the Lower Mainland for the last two decades.
Q: Shouldn’t I wait for rates to come down?
A: No, load up on real estate in fast-growing population center’s while prices are down.
Rates are high because of the government’s effort to control inflation. Once they’ve wrestled that lower, rates will come back down again. To be clear, rates won’t reduce to the obscenely low rates that we enjoyed during the pandemic. But certainly something lower than we have right now. Expectations are that increases should level out over the next quarter, hold steady for most of 2023, and then start to decline in late 2023 or early 2024.
You can ensure that you enjoy the future of lower rates by taking either a short term fixed rate term (1 or 2 yr) or a variable rate that will float with the economy. I do not recommend a 5 yr fixed at this time, as you would be locking-in while we are at the height of fixed rates.
Q: What does ‘marry the house, date the rate’ mean?
A: It means that a house price is something you can lock in now, and hold forever. The rate, on the other hand, is only something you should have a short term relationship with, because we expect it to go down. So, don’t commit to a long term relationship with your mortgage rate right now.
Q: Shouldn’t I be worried about the recession?
A: Of course, but you still need a place to live. If you are a renter, that market will only be squeezed tighter as landlords carry higher mortgage and ownership costs. They will then either sell or find a way to pass those costs along to tenants rather than be under water on their investment.
As an owner, you can have certainty of a place to live, not worry about the threat of eviction because your landlord has sold the property, and know that you are investing in your own property equity rather than someone else’s. Most economists aren’t expecting any recession next year to be a lasting one and relief will come fairly quickly. It is a government-orchestrated recession to combat inflation and any downturn is likely to be moderate and short lived.
As long as you heed the basics (buy where there’s net migration, employment growth and transportation access), and as long as you have the minimum down payment and ability to debt service, housing fundamentals will do the heavy lifting.
Q: What can I expect if I do decide to wait?
A: Regardless of housing prices and interest rates, the fundamentals of supply and demand will eventually dominate. We still have the same huge supply deficits that drove up real estate pricing in the first place, and there are simply no economic reasons to expect a crash. If that’s what you’re waiting for, know that there simply isn’t any panic-selling happening, and there probably won’t be. Buyers that have been sidelined for the last 8 months will rush back in, in typical Lower Mainland style, and cause another surge. We never seem to enjoy a happy balance here; it seems that we swing from one extreme to the next. It’s unfortunate, but predictable.
For more information and to get in touch with Rebecca Awram, contact us at firstname.lastname@example.org
*The material provided is for informational purposes only and is not to be considered financial advice. It is to be used as a guide in purchasing a home and attaining the finance needed to do so.
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