Why is Right Now the Best Time to Buy a New Home
Have you ever wondered why sophisticated investors know exactly when to buy and most of us seem to miss this opportunity?
Let’s consider how investors evaluate the market to spot the best time to buy. First of all, real estate is rarely a short term game for investors and there are many factors that influence the real estate market and pricing fluctuations. This article will deal with a few of those key influencing factors that have proven to be reliable indicators over the years.
Investor Key Performance Indicators:
- Improving commercial market precedes an improving residential market: According to the most recent CBRE Report (Canada Q1 2018 Quarterly Statistics), Edmonton’s commercial leasing market continues to demonstrate that commercial property investment is gaining momentum. Approximately 122,616 square feet of office space was leased in the first quarter of 2018. Most of the activity came from the financial core, which was driven by pent up demand and organic growth from the health and professional business sectors. Source: Braden Equities Inc.
- Decreasing Vacancy Rates improve rental investment proforma: It stands to reason that if less people are buying, more people are continuing to rent or remaining in their current home longer. The new mortgage qualification rules have caused an adjustment in the marketplace, by adjusting to what people can afford or reducing the debt that a family is carrying to be able to afford more home. All this contributes to an increase in rental rates thus better returns. Source: CMHC
- Improving job market positively impacts housing demand, immigration and consumer confidence: Edmonton’s chief economist John Rose and senior economist Felicia Mutheardy point out the positives of job growth in the Edmonton Region. “Job gains in the Edmonton region continue to demonstrate that the region is recovering from the downturn in 2016,” “With further month-over-month increases in June 2018, the Edmonton region’s full-time employment gains suggest employer confidence is on the rise as they add to their work-force and increase hours worked. The two economists believe employment in Edmonton should grow in the second half of the year in the manufacturing, professional services and financial services sectors.
What Renters and New Home Buyers Really Need to Know
Waiting for the social proof for the best time to buy (meaning social media and news reports) can cost you money and missed opportunity and is usually past the tipping point.
Top Realities in the New Home Industry You Must Consider
1. Interest Rates will continue to rise: Bank of Canada is expected to resume tightening key interest rate Wednesday. The key interest rate is expected to nudge up to 1.5%. The bank’s target for the overnight rate — what major financial institutions charge each other for one-day loans — has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements. (CBC News · Posted: Jul 10, 2018 2:04 PM ET | Last Updated: July 10) Based upon this, mortgage lending rates will also continue to rise.
2. Increase in new home construction costs are fueled by new tariffs, changes to building code as well as a number of supply shortages: Translation? Costs are going to continue to climb but many builders are trying to hold the line and absorb the increases….FOR NOW. In a buyer’s market it is hard to increase prices, but when inventory numbers drop even a little, you will see the prices begin to rise.
3. Saving for a down payment? If you build or buy a home under construction you can save your down payment with most builders while you wait for completion. A number of builders offer down payment instalment plans with as little as $1000.00 down at the signing of the initial agreement. There are other ways to come up with the down payment that builders may offer like sweat equity or you could even borrow the down payment if your credit is well established. A number of builders even offer credit restructuring while your home is under construction so that by possession you will be able to qualify.
It’s a Buyer’s Market
If you can buy, then it is time. Builders will offer more buying incentives and immediate possession homes are currently priced to sell. Standing inventory levels are high, which is one of the main reasons investors are coming back into the market. If you have a home to sell, many builders have a number of options including guarantee sale programs.
Everything is positioned for the buyer to get the best deals right now. Waiting until you receive social proof will undoubtedly result in a lost opportunity. Don’t take this writer’s perspective on it, just ask a seasoned investor.
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