You’ve probably heard real estate agents say that the current market is a buying opportunity. You’ve also probably thought, they only say that because they always think it’s the time to buy. Is it true? You worry that home prices will decline even further and you don’t want to overpay for a home.
If you own a home that last year was worth $350,000, and prices have declined 10% then your home value will have declined $35,000. The home that you want to purchase would have been valued at $500,000 last year but a 10% decline puts it at $450,000. If you had bought and sold in 2008 your new home would have cost $150,000 more. Today your new home will cost you $135,000 more.
2008 Value 2009 Value
New Home 500,000 450,000
Your Home 350,000 315,000
Difference 150,000 135,000
What does that mean for you?
Are we at the bottom of the market? It depends on the area. Prices in North Oakville have remained relatively stable. They suffered a minor dip late in 2008 but have recovered quickly. So, if you live in the North Oakville, River Oaks area, you are in the unique situation of having a home whose value has not been affected as strongly as in all other areas. This does create a unique buying opportunity for you to move up.
Is it Time to Buy?
As the market rebounds, it is inevitable that prices will start to increase again. Even with a 5% increase you can see how that affects your purchase.
2009 Value 2010 Value
New Home 450,000 472,500
Your Home 315,000 330,750
Sounds all nice and logical, right? What happens in reality is somewhat different. The various segments of the market increase and depreciate at different rates. When you hear on the news that home prices have dropped by 10% they are talking about AVERAGE prices. Homes for the first time buyer don’t tend to drop in value as much as larger homes do. The flip side is that when prices increase, the smaller homes don’t increase as much as the larger homes do.
Also, there are still homes for sale on the market, with Sellers who HAVE to sell for many reasons. They may have purchased a home from a builder months ago and now been caught up in the downturn. These “fire sale” homes are decreasing as time goes on. This means that “The Deals” are disappearing….but it doesn’t mean that you shouldn’t buy now. It is the most advantageous time to move up…right now.
Let’s look at a real life case: ( They were my sellers in Oak Park an buyers in Wedgewood Creek)
2008 Value 2009 Value
OAK PARK (Detached) 405,000 415,000
WEDGEWOOD CREEK 660,000 740,000
Difference 255,000 325,000
They saved 70,000 CAD by buying this year, last year they could not afford this move. And do not forget that they mortgage rate now much lower than last year as well.
Krisztina Neglia is a RE/MAX Oakville real estate agent specializing in properties across the Oakville and Mississauga region. Contact her today if you need to buy or sell your home: 247 Roxton Road, Oakville, ON L6H 7K3 T: 905-272-3434 C: 416-570-2221 E: email@example.com
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