Should I Buy or Sell in a Slower Market?
Last week, I participated in a podcast with mortgage advisor, Heather Wood to discuss home buying and financing during this COVID-19 crisis. We briefly discussed mortgage rates and utilizing less risky modes of financing and refinancing mortgages as well as whether buying now could be beneficial. Click HERE to listen to our podcast.
As mentioned in the podcast, move-up buyers could greatly benefit from a slower market. The example I used was with someone who wants to sell a $500k condo and move into a $1 million house. This person needs to buy and sell no matter what market they are in, but would ultimately save more money in a slower market because getting less for a $500k home will make less of an impact when they are paying proportionately less for their $1 million home. If they waited till the prices go up, they would have to pay way more for that $1 million home despite getting a little bit more for their $500k home. It’s all about the proportions.
Who else can benefit from a slower market?
An obvious candidate would be the investors. If you are looking to invest in real estate, you want to make sure you’re paying as little as possible for your investment. Right now, prices are still fluctuating as we are still in the beginning stages of figuring out what impact COVID-19 will have. As a result, sellers are starting to relax on pricing and it is very possible this will continue on in the next few months. However, that being said, those looking to flip a home (buy a fixer-upper, renovate and sell it quickly) may not see much return right now, since market conditions are still uncertain in the short term.
Additionally, first time home buyers may also benefit right now if they have been saving up and looking for the right time to get into the market. The Bank of Canada has made cuts to the prime rate three times in March by 1.50%. This is not normal by any means and could be the perfect opportunity for any buyers to take advantage of these low rates, especially if it means you could be saving $78 per month for every $100,000 you borrow. That’s HUGE!
Regardless of your situation, waiting for the market to recover is often not the right choice, as I have shown above. Timing is everything when it comes to any real estate transaction and now may or may not be the right time for you. If you are wondering about whether or not you should consider buying or selling right now, we are here to listen. Contact us today and we can give you valuable insight on current market conditions and statistics to help you make the right choice.