Should I Buy A Metro Vancouver I Fraser Valley I BC Home Now?
(August 21, 2015
)
You'd have to have been hiding under a rock in Spuzem not to know that Metro Vancouver real estate is pricey...ok more like insane and getting more so by the minute, with few signs of slowing down regardless of special interest group and political pandering.
You'd have to have been hiding under a rock in Spuzem not to know that Metro Vancouver real estate is pricey...ok more like insane and getting more so by the minute, with few signs of slowing down regardless of special interest group and political pandering.In fact, prices have doubled in many Metro Vancouver and Fraser Valley areas in less than a decade and continue to rise. Remember when we penned the 2004 report entightled, The Fastest Way To Become A Millionaire - Inherit it or invest in BC real estate?
A lot of Metro Vancouver and Fraser Valley residents (mostly Vancouverites) have postponed homeownership not necessarily because they couldn't afford it if they exercised some dicipline and investment strategies but because they’re concerned about (or waiting for) a house price correction. Meanwhile, they’re paying rent each month while their peers who own homes are building equity so they can eventually upgrade in the future and will be mortgage-free when they retire.
Here’s a BC Home Hunter look at the reasons to stay on the fence and keep renting versus entering our hot real estate market.
Reasons to Get Into the Hot Metro Vancouver and Fraser Valley Market
One of the major downsides of postponing homeownership is not being able to afford the property in future that you can afford now. Many of the people who sat on fence about buying in the Greater Vancouver area a few years ago can no longer afford the home they could have bought, not to mention the thousands of dollars they’ve spent on rent.
A lot of Metro Vancouver and Fraser Valley residents (mostly Vancouverites) have postponed homeownership not necessarily because they couldn't afford it if they exercised some dicipline and investment strategies but because they’re concerned about (or waiting for) a house price correction. Meanwhile, they’re paying rent each month while their peers who own homes are building equity so they can eventually upgrade in the future and will be mortgage-free when they retire.
Here’s a BC Home Hunter look at the reasons to stay on the fence and keep renting versus entering our hot real estate market.
Reasons to Get Into the Hot Metro Vancouver and Fraser Valley Market
One of the major downsides of postponing homeownership is not being able to afford the property in future that you can afford now. Many of the people who sat on fence about buying in the Greater Vancouver area a few years ago can no longer afford the home they could have bought, not to mention the thousands of dollars they’ve spent on rent.
There’s no reason to think that will change any time soon – so the longer you wait, the further you get left behind, and you’ll end up paying off your landlord’s mortgage for the rest of your life instead of your own. What’s more, rental prices in Vancouver are skyrocketing too, and rental vacancies are extremely tight, so renting is no longer a cheap or secure option.
If you buy a home, even in the unlikely event of real estate prices subsequently correcting, with the equity you are creating and current low rates, you could still break even on your housing costs when you consider the amount you would have paid every month in rent. Plus eventually the market will go back up again – it’s only a temporary loss of value and is only a problem if you wish to sell before the price has recovered. (And the chances of a major crash are low, according to all the market indicators and economic forecasts.) Did we mention the historically low interest rates? If your a millennial you won't remember the 19%+ mortgage rates of the early 80's, so if you think you have it bad now it's time for a wake up call.
Reasons to Sit on the Fence
There is only really one situation where it makes financial sense to continue renting, and that is if buying would truly stretch your finances to the point where you wouldn’t be able to deal with an emergency like a job loss or a major repair bill. If that’s the case, and there’s definitely no option for you to buy a home at a lower price that doesn’t stretch your finances, then you should invest what you can and wait until you’re more stable financially, and then buy.
If you buy a home, even in the unlikely event of real estate prices subsequently correcting, with the equity you are creating and current low rates, you could still break even on your housing costs when you consider the amount you would have paid every month in rent. Plus eventually the market will go back up again – it’s only a temporary loss of value and is only a problem if you wish to sell before the price has recovered. (And the chances of a major crash are low, according to all the market indicators and economic forecasts.) Did we mention the historically low interest rates? If your a millennial you won't remember the 19%+ mortgage rates of the early 80's, so if you think you have it bad now it's time for a wake up call.
Reasons to Sit on the Fence
There is only really one situation where it makes financial sense to continue renting, and that is if buying would truly stretch your finances to the point where you wouldn’t be able to deal with an emergency like a job loss or a major repair bill. If that’s the case, and there’s definitely no option for you to buy a home at a lower price that doesn’t stretch your finances, then you should invest what you can and wait until you’re more stable financially, and then buy.
Keeping in mind that if you cannot afford an actual home in Metro Vancouver you could potentially be able to secure an outsanding and very affordable rental investment in the upcoming areas of the Fraser Valley. This will put you on the path to building equity and secure long term low interest rates if you "lock in." Many people take pride in owning a home and making it their own, but there are additional costs that aren’t associated with renting such as maintenance, strata fees and the potential for special assessments, and you do have to be able to pay for them.
Our real estate team are not huge fans of the average Metro Vancouver condo as an investment tool we are however huge fans of dirt and owning it.
Each individual’s financial situation is different, so even if you’re not sure about buying, call and speak to our real estate team members and if necessary with one of the amazing mortgage brokers we work closely with to go over your budget and fully understand what you can afford based on your income and expenses.
Each individual’s financial situation is different, so even if you’re not sure about buying, call and speak to our real estate team members and if necessary with one of the amazing mortgage brokers we work closely with to go over your budget and fully understand what you can afford based on your income and expenses.
Together with our real estate team we can run and design different scenarios to show how different rates, terms and amortization schedules would impact your monthly payment. Then you can make a fully informed decision about whether it’s time to buy instead of waiting for a crash that may never come.
Whatever direction you or anyone you know is moving in don't hesitate to call our friendly real estate team anytime with your real estate questions, 604-767-6736.
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