Is It Smart To Buy A New Home Now?
If you’re currently thinking of buying a home, you’re probably wondering if now’s a smart time to do so.
Buying a new home can seem like an overwhelming prospect at first, especially when the real estate market is moving quickly. First-time buyers are often left wondering if they should buy now, if homes will be cheaper in a year’s time, or if they’ve already missed an opportunity.
The quick answer to your question is yes! While we did see some short-term material disruptions in an otherwise growing and healthy market. Buying a home is a long-term investment, and all evidence suggests the benefits of getting into the market as soon as you can – especially when interest rates are so favourable.
But let’s take a look at some of the factors currently affecting real estate in Edmonton to get some details to that answer.
Positive Market Trends After A Year Of COVID-19
Over the past year or so, the COVID-19 pandemic has been one of the major factors affecting the housing market and has had a lot of people wondering if now is a good time to buy a home.
Social distancing rules and strict cleaning measures have drastically reduced the number of people who are visiting showhomes and attending open houses. Lockdowns have put many people’s job security in an uncertain spot. Others have simply been reluctant to move during the outbreak.
As things begin to return to normal, case numbers continue to drop and businesses reopen. This means you can expect to see the real estate market recover as well. In fact, we are already seeing a shift to a sellers’ market in Edmonton for resale homes! This is a sign that everyone who’s been putting it off for the last year is now deciding to enter the market. So don’t delay your search. If you’re in the market for another home, now is a great time to capitalize on a sale.
Lumber Prices are Stabilizing
One of the secondary effects of the COVID-19 pandemic has been a sharp spike in the prices of many commodities, due to interrupted supply chains and extra demand. One of the biggest increases has been in the price of lumber, which has seen a huge jump in demand as people who have been unable to work are catching up on their building and renovation projects.
This in turn led to a rise in the price of new homes, as the materials required to build them have become increasingly costly. However, Lumber manufacturers over the past several months have been producing record levels of supply. As a result, the prices of lumber have stabilized and we aren’t expecting to see any other major spikes or dips in material costs – which should provide a much higher level of price certainty to home buyers.
Interest Rates Are At All-Time Lows
One of the most compelling reasons to buy a home right now is the current rate of mortgage interest. With some lenders offering rates below 2%, they’re currently at the lowest rates in history.
This makes it a fantastic time to start thinking about owning a property. Even if the overall price of a home is slightly higher at the moment, the amount you’ll save in interest over the lifetime of your mortgage will more than cover the difference – if you find the right deal.
|Interest Rate||1.74%||1.99%||2.09%||3.64% (2019)|
Numbers are based on a 5% down payment and a 25-year amortization period.
A lower interest rate also means you’ll be able to pay off the principal on your mortgage sooner, which allows you to start building equity more quickly. Speaking of which…
It’s Always A Good Time To Start Building Equity
One of the main arguments in favour of getting into the real estate market as soon as you’re able? The sooner you own, the sooner you can start building equity in your home, and the better off you’ll be in the long run. Canada’s real estate market is booming and isn’t showing any signs of slowing down.
By getting into the real estate market as soon as you can, you’ll not only be building the equity you own in your home, but you’ll also be giving it more time to grow in value naturally as the housing market expands.
Down Payment Programs Can Really Help
In addition to down payment help for first time home buyers as provided by programs such as the Home Buyers’ Plan or using your RRSPs for a down payment, quality builders around the capital region may also provide some down payment help of their own.
For example, some builders may offer flex financing programs that include down payment assistance, credit help, mortgage subsidies, low interest rates and more. If you’re moving up to a new home, the equity from selling your current house can make a huge difference with your down payment as well.
While we did see some short-term material disruptions in an otherwise growing and healthy market. Buying a home is a long-term investment, and all evidence suggests the benefits of getting into the market as soon as you can – especially when interest rates are so favourable.
You don’t need to wait for experts to tell you that it’s a good time to buy a home. As long as you’re financially ready for homeownership and have made some decisions about what you’re looking for, you should feel confident about shopping for a home.