7 Dec 2018

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Do I Buy Now or Should I Wait And Buy Later?

Are you or someone you know still trying to time the housing market?

If you are still sitting on the fence, I feel compelled to share a few insights. It is no secret our Government put in policies to slow the growth of the housing market. While some consumers have been sitting on the sidelines waiting for prices to drop, interest rates have continually increased. Our Governments efforts to provide more affordable housing have been for not, as interest rates have moved up far faster than prices have dropped, at least in Calgary. If I’m a betting man, we might see prices drop a little further yet, but it also appears rates will climb a little further yet.

So what might this look like?

Let’s take an average $450,000 home and assume 5% down payment. For every 10 basis point (0.10%) increase in rate, the home price would have to drop 1% to break even (from a monthly payment perspective). Since Jan 1, 2018 fixed rates have increased 54 basis points (0.54%) on average.  Year over year, the median single family home has only fallen 2.04%.

My point, timing the market is impossible and it will likely end up costing more trying to do so.

Solution!

Get in now and don’t worry about what the market is doing. I say that because unless you are a speculator with a short-term horizon, the home value only matter upon time of sale. In other words, 10 years from now when you chose to sell, only then does the value matter. At any point prior, just enjoying the home and the fact that you a building your own equity and not someone else’s.

Jeremy Nagel

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