The dream of owning a home is clearly still on the minds of many especially now that the housing market appears to have lost some steam. Canadian home sales have pulled back and prices have been on the decline.
The coveted spring home buying season is around the corner so is now the time to buy? Maybe!
Barring any major shock to the economy, further deterioration in 2019 could be averted given the strong job market, strong population growth and what appears to be a more patient Bank of Canada. And the big one – The Bank of Mom and Dad is alive and well.
Before you decide if buying is for you, first you simply have to run the numbers of what you can and can’t afford. Your financial institution, a mortgage broker or online calculator can help in the initial stage.
Knowing what you want and, more importantly, don’t want in a home is critical. For example, a growing trend is outdoor living space not simply for grilling, but entertaining and living. A fixer upper with a renovation budget allows for the perfect kitchen to be within your reach. A generation accused of being avocado toast lovers and urban dwellers appear to prefer function over size meaning less square feet over suburban sprawl. Transportation time to and from work is often a top consideration.
The is good news for those exploring the spring market opportunities in the once hot Toronto or Vancouver markets is that opportunities may be more available. Strong condo price growth has resulted in the price gap of single family homes and condos to narrow significantly. This provides the opportunity for move-up buyers to trade into larger properties freeing up inventory.
Whether now is the right time to buy for you is personal, but now is the right time to explore the possibilities:
- If you own a home, you stop writing a cheque each month building up your net worth and not your landlord’s
- Home value appreciation – sure there are costs, but over time historically there has been wealth creation and capital gains exemption
- Stability in your living space and freedom to change what you want when you want.
Not to Buy:
- Lack of financial diversification and an unwillingness for lifestyle compromise
- Mortgage costs, insurance costs and consumption costs – your home can quickly become a money pit.
- Loss of opportunity to relocate when you want
Homeownership isn’t a dream or even a reality for everyone. All I’m suggesting is the spring housing market could provide the opportunity to explore the options. Ultimately the decision to buy or not buy stems from affordability and the type of life you financially can afford to live. And for most, be prepared to be house poor regardless of the deal you may uncover.