March 9, 2009.
Is it Time to Buy?
A little uncertain about whether it's the right time to buy?
You have lots of company. I get asked the same question (or something similar) almost every day.
Buyers are realizing that this market coupled with rock bottom interest rates represents a unique buying opportunity.
The question is not whether they should be buying, but when.
The answer is not so cut and dried...
Up until the past few weeks, I have been telling my clients to be patient...the Spring Market is upon us and theoretically, there will be more homes to chose from.
I am starting to second guess this advice.
In fact I am advising my clients, that if they find something they like...buy it!
WHY?
Check this out...
30% of Ontarians plan to buy over the next 2 years... UP FROM 21% a year ago.
When you just look at those people 35 and younger this jumps to 48%... UP FROM 36% last year.
73% of people feel we are in a Buyers Market.
Despite all the "doom and gloom" in the newspapers, 83% of people feel home ownership is a good investment. This is only down 7% from 2006 when 90% felt it was a good investment.
In our Office SALES ARE UP 10% over last year.
The "news" would give you the impression that there is a huge glut of unsold properties out there. While this is true for some areas of the US, here it is much different.
We are just at the beginning of the Spring Market when "inventories" starts to climb. At our weekly office meeting Wednesday, there were only FOUR new listings. (Usually at this time of the year 12-16 would be the norm) All Agents were lamenting the fact that there was very little inventory out there.
In some cases, in demand areas, where the property has been priced right, we are even seeing MULTIPLE OFFERS.
I have Buyers who want to buy but can't find what they are looking for. There simply isn't enough selection.
At the same time...
I also have Buyers who are trying to predict the bottom of the market and so are holding off their purchase.
Consider this...
Bank of Canada chairman Mark Carney says we should start seeing signs of recovery by the end of '09 or the beginning of '10.... At the same time the newspapers are saying this will go on for years.
It's all very confusing for an Agent... I can just imagine how confusing it must be for Buyers.
Here are some of my observations/conclusions/opinions...
Interest rates have bottomed... Any further cuts would be negligible. Realistically, they really have no where to go, except up.
There is a fine line the Bank of Canada has to walk. Economic reaction to their stimulus measures will be delayed. Actions they take today can't be measured for at least a quarter (3 months), maybe more. Leaving these measures in place too long runs the risk of inflation*.
They will be watching the economic numbers like a hawk. Any positive change and they will start boosting rates again.
Why so few homes on the Market?
Although manufacturing is being hammered, this pain has not translated to the rest of us...at least not yet.
Toronto is not a manufacturing hub so we are not feeling the pain. Consequently most home owners who don't need to sell, aren't. Hence we have fewer listings.
So, only those that have to sell are selling and there just aren't enough of these people in the city.
Could the prices drop further? Yes
BUT, Real Estate prices are driven by supply and demand. If all the Buyers that are on the fence right now decide to buy (and there are a lot of them) AND if the number of listings doesn't increase... Well, you get the picture, prices could actually increase.
The Bottom Line
The market right now is unpredictable.
Unless you have a high tolerance for risk, you should consider buying now.
If you can find the right home, you can get it right now at a GREAT PRICE and at a GREAT RATE.
*This just in...
In the States today, Warren Buffet sounded warning bells in regards to the inflationary effects of the "stimulus package",comparing potential interest rate spikes to that of the '70's...YIKES!!!
