Having plans to buy a new house to get out of rent or as an investment? Let us consider that you do have the budget for such, would you just jump in? Or you would rather wait for a certain time of the year to buy your property? After all timing is everything. You can find a better home with the same budget provided that some of these conditions come your way.
Your preferred length of stay:
First of all, how long do you plan to stay in your prospective home? Three years? Four? Or do you want to stay in there for good. If you have bought a home and stayed in there for say two years then you would move out, will your house sell immediately? Would be able to pay out all the taxes even if you are not actually residing in the house? Would you be able to handle all the expenses of homeownership like mortgage payments, property taxes, insurance and maintenance? If no seems to be your answer, then, its of my opinion that it is better to rent rather than buy if you do not have plans of staying long.
Holidays
Ever thought about shopping for a home in Christmas? Sounds like a crazy idea but that is the thinking of the majority of buyers. Imagine the spirit of Christmas, the kids running around, everybody has their spirits high, everybody is generous. “Honey, give him the discount, it’s Christmas”. Sellers often concede to bigger discounts simply because it’s that time of the year. Generally, people do not wish to be bothered during the Holidays because it’s a time for their family. If there are for sale signs even during holidays, it will prove that the poster is indeed a motivated seller; that would now lead you to negotiate the prices to a much lower rate.
Economic turmoil and the down cycle of real estate
Before the market crashed, everybody was making money characterized by low capitalization rates and high income. It was a process that has been going on in history. It happened years before like in 1980 when the real estate market took a downfall, it was recovering smoothly until the late part of the 80’s only to nose dive again in 1990, and as we all know we had our share of troubles in 2008. It shows that the market has a somewhat predictable cycle that plays in between 12 to 16 years. When the economy is down, the inventories of properties tend to increase due to massive foreclosures. Banks and resellers would have to compete with each other to get a buyer and since there is much to choose from, the value of the property decreases. It will now be the best time to jump in and ride the market when it is on its way to
recovery. As of the moment, Economic institutions in Canada reported of a 3.9% increase in GDP, a little lower than the stable 5% but this lays the groundwork for total recovery.
After wedlock
For new couples it would be best to look for a home right after marriage since you can consolidate both of your funds in the purchase of a house; that is technically a 50% discount. Being married also qualifies you to a possibility of a higher amount when applying for a bank loan to finance your house because of the combined assets plus the fact that you can make a higher down payment that makes the monthly amortization less of a hassle.
One last thing
The Bank of Canada maintained its 1% interest rate despite the optimistic forecasts that the real estate market would go up soon. So let us consider the numbers:
Home price: $110 000
Down payment set at 20%
Mortgage rate 1%
Annual tax rate set at 2.5%
Rent set at $800
Rent increases 5% a year
Property value increases 4% per year
It will show that on the second year of residency, buying a house will cost less than actually renting. Saving you the amount of $3,087 and on the third year, home buyers will save up to $12,042. The actual computations will be discussed in length soon.
