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If home prices will drop, should I wait to buy in 2021?
Will you save money by waiting? Below is a simple cost-benefit approach to help you decide whether to wait or buy now. Its not an exact calculation, but it should give you a rough idea. How much could you save by waiting 12 months for lower prices? Use my What can I afford calculator to calculate your maximum home buying budget. Then calculate how by how many dollars the price would drop with a 10% correction and with a 20% correction. For example, a $400,000 home would drop $40,000 with a 10% correction and $80,000 with a 20% correction. How much will it cost you to wait? Multiply your monthly rent by 12 to calculate your annual cost of waiting a year. For example, the average rent for a house in Calgary, at that price range,is $1,850, so the annual cost is $22,200. The example above, the cost of waiting is $22,200, or roughly 5.6% of the purchase price. If you feel prices in Calgary will only drop 10% then it would make sense to buy as prices have dropped 5% because the rent savings will offset the remaining potential home price savings. Reviewing the housing statistics in Calgary the percentage of change based on the average price is 3.59% from last year. Contacting an experienced realtor will help understand the history of price adjustments, as well the forecasts for the rest of this year.
Employment continues to rebound in July
From February to April, 5.5 million Canadian workers were affected by the COVID-19 economic shutdown. This included a drop in employment of 3.0 million and a COVID-related increase in absences from work of 2.5 million. Employment rose by 419,000 (+2.4%) in July, compared with 953,000 (+5.8%) in June. Combined with gains of 290,000 in May, this brought employment to within 1.3 million (-7.0%) of its pre-COVID February level. The number of Canadians who were employed but worked less than half their usual hours for reasons likely related to COVID-19 dropped by 412,000 (-18.8%) in July. Combined with declines recorded in May and June, this left COVID-related absences from work at just under 1 million (+972,000; +120.3%) above February levels. By the week of July 12 to July 18, the total number of affected workers stood at 2.3 million, a reduction since April of 58.0%.
Canadian home sales and new listings up again in June
Home sales recorded over Canadian MLS Systems in June 2020 rebounded by a further 63%, returning them to normal levels for the month some 150% above where they were in April. Transactions were once again up on a m-o-m basis across the country. Among Canadas largest markets, sales rose 83.8% in the Greater Toronto Area (GTA), 75.1% in Montreal, 60.3% in Greater Vancouver, 99.7% in the Fraser Valley, 54.9% in Calgary, 59% in Edmonton, 22.5% in Winnipeg, 34.8% in Hamilton-Burlington, 67.9% in London and St. Thomas, 55.6% in Ottawa and 43.6% in Quebec City. Actual (not seasonally adjusted) sales activity posted a 15.2% y-o-y gain in June. REALTORS across Canada are increasingly seeing business pick back up, stated Costa Poulopoulos, Chair of CREA. With sellers and buyers returning to the market, we continue to make sure clients stay safe by complying with government and health officials directives and advice, increasingly using technology to list and show properties virtually while providing secure methods to complete required forms and contracts. As always, but maybe now more than ever, REALTORS remain the best source for information and guidance when negotiating the sale or purchase of a home, continued Poulopoulos.