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Should I wait or buy now
Should I buy now or wait a yearas prices are dropping, but interest rates are rising? I hearthis question daily, and my usual answer drones on about interest rate projections,supply and demand of homes blah blah!! So I thought I wouldrun the numbers and see what makes the most sense based on the numbers, not my opinion! Option 1 - If you bought a home for$100,000 and put 5% downand had aninterest rate of 3.59% on a 5 year term amortized over 25 years you would have monthly payments of $498.46and at the end of the first year you would owe $96,397. That is a decrease in your mortgage of 2.53% over the first year. Option 2 - Lets assume the housing market dropped by 3% over the next yearand interest rates went up by1/2% (most economists are predicting a 3/4% increase in that period). So instead of a $100,000 purchaseyou only have to pay$97,000 and put 5% down, but the rate would be4.09% with monthly payments of $509.29. Now lets look into the future and see which option has the lowest mortgage 5years from the start of Option 1. Option 1 -mortgage balance is $85,467 Option 2 - mortgage balance is $86,300 Plus under Option 2 you would have paid $480more in monthly mortgage paymentsover the last 4 years than you would with Option 1 for a total savings of $1,313 per $100,000 in purchase price if you buy now instead of waiting a year. If interest rates do go up as projected by 3/4% over the next year, we are looking at savings that would offset a drop of closer to5% in values. If you want to discuss your personal situation and have me run yournumbers, please let me know as knowledge is power, and having the info will helpyou sleep better?
Housing market continues to moderate in June
Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were down between May and June 2021. Home sales recorded over Canadian MLS Systems fell by 8.4% month-over month in June 2021, marking the third straight monthly slowdown since activity hit an all-time record back in March. While sales are now down a cumulative 25% from their peak, and below every other month in the last year, June transactions still managed to set a record for that month. Month-over-month declines in sales activity were once again quite broad-based, with sales moderating in around 80% of all local markets, including almost all large markets across Canada. The actual (not seasonally adjusted) number of transactions in June 2021 was up 13.6% on a year-over-year basis and marked a new record for that month. While there is still a lot of activity in many housing markets across Canada, things have noticeably calmed down in the last few months, said Cliff Stevenson, Chair of CREA. There remains a shortage of supply in many parts of the country, but at least there isnt the same level of competition among buyers we were seeing a few months ago. As these conditions continue to evolve over the summer and fall, your best bet is to consult with your local REALTOR for information and guidance about buying or selling a home at this stage in the cycle, continued Stevenson.
Record rise of home prices in May
In May the TeranetNational Bank National Composite House Price IndexTM was up 2.8% from the previous month, the largest monthly rise since the index series began in 1999. It was led by four of the 11 constituent markets: Ottawa-Gatineau (4.9%), Halifax (4.3%), Hamilton (3.7%) and Toronto (3.4%). Rises were more moderate for Vancouver (2.3%), Winnipeg (2.2%), Montreal (2.2%), Victoria (2.1%), Calgary (1.4%), Quebec City (1.2%) and Edmonton (1.2%). It was a third consecutive month in which all 11 markets of the composite index were up from the month before. The May rise was consistent with the increase in number of home sales over the last several months as reported by the Canadian Real Estate Association. For a ninth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 2.1% in May, suggesting that the uptrend of the published (smoothed) index could continue. The May composite index was up 13.7% from a year earlier, for a 10th consecutive acceleration and the strongest 12-month gain since July 2017. The 12-month rise was led by five markets Halifax (29.9%), Hamilton (25.5%), Ottawa-Gatineau (22.8%), Montreal (17.6%) and Victoria (15.3%). Toronto matched the countrywide average at 13.7%. Lagging that average were Vancouver (11.9%), Winnipeg (10.4%), Quebec City (9.8%), Calgary (4.5%) and Edmonton (3.6%). Besides the Toronto and Hamilton indexes included in the countrywide composite, indexes exist for seven smaller urban areas of the Golden Horseshoe Barrie, Guelph, Brantford, Kitchener, St. Catharines, Oshawa and Peterborough. In May all seven were up from the previous month and from a year earlier. The 12-month gains ranged from 27.6% for Brantford to 31.4% for Barrie. Source: https://housepriceindex.ca/2021/06/may2021/