Canadians Optimistic About Purchasing Homes

A recent survey conducted by RBC finds that almost 2/3 of Canadians feel it is a good time to purchase a house despite the continuing global recession. 65% of Canadians surveyed felt we are now in a “Buyers Market” and were considering purchasing a house within the next 2 years. This is promising news, however we are still not seeing this sentiment showing up in home sales statistics. The Toronto Real Estate Board (TREB) reported 2,670 home sales in Toronto in January of 2009 compared to 5,075 home sales for the first month of 2008.

Although the study conducted by RBC is promising I do not think we will see people’s apparent eagerness to buy a home materialize anytime in the near future. The survey itself states people were considering buying a home within the next TWO years. Well, 2 years is a long time frame. It is understandable people are nervous about purchasing a home given the current financial climate. The fear of losing your job and not being able to make your mortgage payments or purchasing an asset that could possibly decrease in value before the end of the year, makes home ownership feel a bit more of a gamble these days. This is especially true since we are just coming off the strongest bull run for real estate in history. Unless you owned a property in the early nineties you can’t even comprehend the fact your house will not be going up in value this year by atleast 5%. Real estate values only go up don’t they?

The truth is, real estate has been and will continue to be a solid investment……when done properly. People need to remember real estate is meant to be a long term investment and not something you flip after 2 years for a 20% return. In Toronto, housing prices have declined from our peaks of a year ago and interest rates are at historical lows. There has never been a better time to buy a property. Work with your real estate agent to find a property in an area that will hold its value. Set a budget for your purchase and stick with it. Remember, this is a buyers market and there is no need to get in to a bidding war…..there are plenty of other houses to choose from. Finally work with your mortgage broker to help get you financing that makes sense for you and your family.

My final thought on the subject is more of an observation. Two years ago people would extend themselves financially far beyond what was comfortable just so they could buy their dream home. They financed 100% of the purchase price and paid well over the sellers asking price (which was already inflated). No one wanted to miss out on getting a piece of the real estate pie. Well that pie is now on sale and not only that, you can borrow money to buy that pie at an interest rate of little over 3% (variable mortgage). Where are all of those people now? Maybe the SALE sign isn’t big enough….or maybe it is being blocked by the giant billboard advertising the downfall of our society as we know it. There is a definite herd mentality when it comes to real estate. Just because the masses have backed off does not mean you need to sit on the sidelines and wait for the next real estate frenzy. Now is your chance to get in on the ground floor and wait for the next real estate boom.

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