If you are a first time home buyer, it is time to look for a suitable home or condo within your budget in a good location; sooner the better. During 2009 and 2010, except for a brief period, most of the time, real estate prices were rising. Some people anticipated a US type crisis in the real estate in Canada and waited for the prices to fall. All those people were disappointed. As shown elsewhere, prices continued to rise but the number of units that were available for sale declined.
If you are planning to buy a home in this market, here is my analysis for the first time home buyer and investor.
For the first time home buyer, check and satisfy yourself on the following aspects before proceeding further:
1. Stability of your job and regular cash flow at least for the next 12 months. In turn, this will ensure that you will get approved for a mortgage.
2. Better go for a pre-approval to know in advance how much you can anticipate by way of loan, and to avoid surprises at a later date.
Banks are not the only option for pre-approval. An experienced mortgage agent can look after your interests better, and never presume that direct dealing with the banks are the only option. For finding the best deal in the town a mortgage agent is your best bet, for the simple reason that is what he or she does for a living. They are more experienced and well informed of the market. And well you do not have to pay a fee for their service; they get it from the banks.
3. You should have savings or other resources to meet the minimum 5 % down payment. You should also have another 2 to 3 % of the purchase value to meet the closing costs and other expenses.
4. How much rent are you paying now? Owning a home will certainly cost you more. Don’t forget to take into account the property tax, hydro, water bills etc. into your calculation. How much more can you afford now? Honest answer to this question will help you to determine the size of loan that you can afford. In addition, it will ensure that you live in your chosen home, as long as you desire, irrespective of the movement of prices.
5. Since 1990, home prices have generally been increasing in Canada.
At the end of the day, when you buy a home, you plan to live there for many years; you are not planning to sell it in the near future. Then what? Be honest to yourself and start your hunting for a dreamy home. Need some guidance and explanation, feel free to contact Perrii.
If you are an investor, here’s my analysis for you.
1. Although, there have been three Canadian housing bubble bursts in Vancouver and Toronto since 1980, the bullish economists predict 3-5% increase every year for the next few years. The bearish economists now predict price stagnation, but not a U.S style crash.
2. Canadian Government is taking all possible steps to avoid a housing bubble and will continue to do everything under their control to avoid a housing bubble. Unlike the U.S., Canada is dominated by few banks, and banks in their own interest have tightened their lending to household sector.
3. Immigration will continue to drive housing construction as well as demand. This alone is a powerful factor for Toronto Real Estate Market.
4. Many regions, including Toronto, are forecast to see better growth in the next few years. To some extent, fortunes of Canada and Ontario, are tied up with the fortunes of the U.S. Unfortunately the U.S. economy is still struggling, but despite that Canada can expect to see reasonably good growth.
While no one can predict the future with certainty, we can reasonably expect real estate investing to be profitable over a long term than the bank’s GIC returns. What is long term? In my opinion, anything over 5 years is long term. Don’t buy if you are hoping to flip for a quick profit or if you are already overextended. Real Estate investing is a better hedge against inflation and a better option than leaving your money with the bank. But ensure that you can manage, even if there is no positive cash flow, when you rent out the property and waiting for your property to appreciate.
Real Estate Investing requires careful analysis of several factors. To discuss your personal circumstances, call Perrii @
416 473 6100 Perrii is a Realtor. with HomeLife/GTA Realty Inc.
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