I just responded to a client email on some of the issues covered in the update (see below) earlier today. The one thing I would add to the update is that the market is also likely to get increasingly better for buyers for the next while BUT you might not want to wait for the bottom. When the market went down in 2008, I tried to encourage a couple of people who had been looking for quite a while to buy, given prices were down about 20% at the time. They decided that the prices were going to go down even more and they didn't buy. What happened? Prices are now right back up where they were. Personally, I never worry about timing the absolute peak or bottom of the market-I think that's how you can get stung...once you miss the peak it can go down pretty fast and once you miss the bottom it can go up pretty fast. And of course if you will live in the home, does it really matter if you get the absolute best price possible if it is a place that works for you?
If you have any questions, please let me know.
April 2010 Market Update
Why Now's a Good Time
If you're considering buying a home, now may be a better time than in several months.
That's because, right now, three key factors are working in the buyer's favour: the HST, interest rates, and product selection.
The HST, which comes into effect on July 1, won't have a dramatic effect on the real estate market as a whole; however, there are some areas where buyers and sellers will immediately notice its impact.
Firstly, only new housing (or substantial renovation) will have HST imposed on it, which means that existing resale properties (90% of the market) will remain exempt from this tax. That said, new homes will immediately become 7% more expensive, which will inevitably result in some upward pressure on prices for resale units.
Secondly, real estate commissions will now be subjected to 7% higher tax, as the currently exempt PST portion expires and the GST merges into the HST. Fortunately for consumers, commissions in BC are among the lowest in any jurisdiction in North America, averaging roughly 3% in this province as compared to 5.1% in the US and 5% in Ontario.
To beat these changes, transactions should be completed by July 1st.
With interest rates at an all-time low, now's the best time to get pre-approved and lock into an attractive rate. And with TD and RBC recently announcing that they are increasing their 5-year benchmark rates by 60 basis points, there's renewed urgency to get pre-approved immediately.
Remember: with a pre-approval, you will generally get a guaranteed rate for up to 120-days. You DO NOT need to exercise this right, which means that you only need to borrow the money if you find the right property.
With the onset of spring, an abundance of new product is set to hit the market, meaning that now is a great time to find a property that fits more of your criteria. While the winter months may prove to be a good opportunity to negotiate with a seller, the spring is the best time to find your dream home. Act quickly though, good product doesn't stay around forever!