Ironically, with prices having come down significantly over the past year, and interest rates amazingly low, increasing affordability by leaps and bounds, there seems to be no urgency for the remaining first-time buyers to buy. But truly, now IS a great time to buy.
There seems to be a prevailing opinion among buyers that prices will continue to fall for some time. That may or may not be true. The problem with this thinking is that there is always a lag period between when the market actually starts to correct, and when it is obvious (to everyone) that the recovery has begun. (See graph). By the time that it is obvious to everyone, you will not only have lost some of your "price erosion savings", but you will lose your negotiating power.
If you are investing in real estate for the long-term (i.e. this is to be your family home for a few years to come), trying to time the bottom of the market is more or less irrelevant. If, for example, you continue to rent a few more months, while waiting for the market to drop a
bit further, a couple of different things could happen. The market could stay the same, in which case you have thrown more rent money towards your landlord's mortgage instead of your own. The market could begin to rise, in which case you now scramble to buy (along with the others in your situation), and now find yourself in a much less powerful negotiating position. Or, in the ideal situation, the market drops another percent or even two. O.K., assuming a 2% drop, the $400,000 home is now $392,000.00. But you have spent money on rent during that time instead of paying down your mortgage for those few additional months, and what about paying yourself first? What about the stress of being "in limbo" for that much longer, not starting your new life in your new home? When you look at the affordability of that $8,000.00, with interest rates as low as they are now, you are talking about a little more than a dollar a day. For only a dollar a day more on your mortgage, you are going to put off making a move that will change your life for the better? You are going to put up with your cramped rental situation instead of moving to your dream home FOR A BUCK A DAY!??? Or, for those trading up their home, (which is lacking some bells and whistles), for their dream home, how much money are you really saving by waiting? Any savings on the home you are buying is also being sucked out of your equity in your current home as the market falls.The bottom line is this: If you find a home that meets all or most of your criteria, that is in your price range, and it feels like a home in which you would be happy, BUY IT! Don't put it off waiting for the market to do what there are no guarantees it will do. Your dream home may not wait for you. Selection is very high now, in this buyer's market. You have a better chance of finding a suitable home now than you will once the market starts its correction. Start living now! You and I have no idea when the prices are going to start climbing back up again. There are already signs of life in the Fraser Valley Real estate market. The statistics I just viewed from the FVREB are as follows:
March 31, 2009: listings 3028, sales 1008
February 27, 2009: listings 2369, sales 682
March 31, 2008: listings 3278, sales 1317
So, as you can see, the sales activity from February to March has increased significantly, and is not far behind the 2008 numbers. The listings are actually down from March 2008 over 2009, so that creates pressure on prices as inventory levels drop (supply and demand).
This is one of the most affordable times to buy that we have seen in many years. Don't miss the boat!
I can help you to make your dreams come true. Call me to help you make the most important decision of your life an INFORMED decision.
