Quote:
Originally Posted by Winsor_Pilates
This reminds me of another important piece of advice.
You will hear "expert" crystal ball predictions like this from almost everyone you talk to about buying your first home.
I've seen a lot of first time home buyers get stressed out over hearing this everywhere and feeling like they need to time it perfectly.
Truth is, no one know for sure what the market will do, so decide for yourself if it's the right time to buy, and ignore most opinions like the one above, unless they have substance to back it up.
Also, consider the effect of mortgage rates on your house price. A 1% increase in rates will equate to about 5% increase in cost. So if you think the market will go down another 5%, but rates will come up 1, you should consider this.
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You need to consider mortgage rates...that is very true. But I think you can time this a little bit. Banks' fear of borrowers going bust keeps rates a little higher as measured as a spread over the underlying government rates which are very low right now. Rates will without a doubt start to go up at some point driven by 1) excessive government borrowing in the US and elsewhere and 2) on the other side of recession is going to be a real inflation risk that needs to be snubbed out with higher rates. So you probably have all of 2009 to wait before this starts to filter through.
As for house prices.....this is going to be largely tied to jobs which is going to be tied the US economy given Canadian export driven economy. I was just back in Calgary and people are still at the malls and restaurants. There seems to be a better go of it in Canada right now vs the US, but I am not sure that is going to continue. We are in the early stages of the credit default cycle. Banks in Canada have not started to take their lumps yet.
Put it this way when trying to time the housing market....there are absolutely NO upside drivers to house prices on the horizon (12 months) but I can think of a few downside drivers.
If you need to buy, like my brother is going to do in Calgary, try your darndest to find those houses that have been on the market for a while and pick the owner off.
Another thing i noted on my trip up to Calgary last week.....natural gas prices are going nowhere but down for a while given the abundance of discoveries over the last few years. Everyone knows where the gas is....getting it out at a decent cost is the risk. So hinging hopes on commodity price rebounds is unlikely. There are probably others that know better, and I am wrapping a lot of things in this little diatribe of mine, but I guess there are lots of elements to think about.
My brother is probably going to buy out of necessity but I think he is prepared to walk away from his low ball offers if need be.