I don’t want to buy a house right now. I have seen or heard these words in the past month more than a handful of times. People I have worked with for months, sometimes years, finally giving up. It is heart breaking to see them give up on their dream of home ownership. If you are considering giving up, don’t. Please let me explain why you should keep going.
If you think it is difficult to buy a house now…
Yes, prices keep climbing and yes, competition is extremely strong. There will likely not be a significant change to this in the foreseeable future though. Even if there is a market correction and prices decrease that will make competition only that much stronger. There are many buyers who simply can not afford a house. If prices do come down though, these buyers may be able to afford them at the new prices. So numerous buyers are back in the game, increasing competition. And as you know, increased competition results in higher prices. With the amount of pent up demand right now and the lack of properties available or coming to market, it is very unlikely that prices will decrease.
Let’s look at the either side of this, at cooling the competition. Raising the interest rates will affect buyer’s motivation and ability to purchase. This will in turn result in fewer active buyers competing for the same property. Problem is that the Bank of Canada needs to be careful with raising interest rates right now with our fragile economy. Rates must increase to address inflation, but slowly over the year. Demand is not just from home buyers though, but from flippers and investors as well. How can you slow their activity? There has been talk about taxing “flipped” properties, banning foreign buyers, and other methods to make it less profitable or appealing, but these are all still in the works. It will be months if not years before these are in place. So, with rising interest rates and policies to discourage investors competition may cool, but not disappear over the coming year.
Prices are too high. I will wait for them to come down.
There are three things right now to consider. High demand for houses, low number of properties available, and low interest rates on borrowing. These are the three things that are really spurring on the market. Add to that the rate of population growth in Canada and the associated increase in demand for properties, compared to the much lower rate of new build homes. This increasing difference between supply and demand has been growing for years now. Even with higher interest rates home prices will not be coming down. You can expect to see price increases year over year closer to 5 or 6 percent instead of the 20 to 30 percent we have been seeing for the past 2 to 3 years. In other words, houses will sell closer to list price or fair market value rather than significantly over ask. But prices will still be going up, not down. The old saying “the best time to buy real estate was yesterday” will remain true. By waiting you will simply find you will be paying more.
The market is just too crazy right now.
I agree with you on this one, but that is no reason to stop chasing your dream of home ownership. Among many clients and colleagues, I hear how things are so difficult and then there is a small window of opportunity. Suddenly there are much fewer offers being presented. Some properties are not even getting any offers on presentation day. It feels like buyers are getting frustrated and putting their search on hold. More and more do it until there is a noticeable ease in demand. Then it is as if everyone hears this, and the competition comes rushing back in. It comes and goes in waves. It was great for those that enjoyed that short window, but they never would have if they gave up looking. If you keep pushing through, you may find one of these windows as well. Otherwise, you may be the reason for one of these windows.
To summarize, I understand that things are crazy and prices are high. I get it that it seems impossible right now. Keep plugging at it though and you will eventually find your opportunity. That is what you are looking for. The opportunity. I will work with you as hard if not harder through the whole process. The only alternative to not pushing on is to give up. No one has ever caught their dream by giving up, and you will not find your next home by walking away.