The streets are lined with gold for anyone willing to work and take a long-term perspective. With prices coming down in residential real estate both locally and across the province, prospective buyers are being granted the opportunity they’ve been awaiting. With more inventory coming to market and available from which to choose, and properties taking longer to sell, buyers are now finding they have more leverage to negotiate favourable terms.
Get ready to pounce! First, make an appointment with your bank or mortgage broker and complete the mortgage qualification process. This way, you’ll have an informed, realistic idea of what you can afford to purchase (which, naturally, helps narrow and focus your search). Also, it will position you more advantageously when submitting the offer as your potential financing will be better organized.
Now, as I say to all my clients: Don’t be greedy. While prices are retreating from their all-time highs, they haven’t – and most likely won’t ever – recede to pre-pandemic nadirs (Evidence? Do you think construction costs have decreased or increased, lately?! There you go…). While you may not agree with the market, the market is never wrong; it is best to offer what is fair and reasonable in your particular circumstances to have a real chance of completing a transaction. If you place a value on your time, you’ll realize that there are costs associated with unnecessary delays, also (just consider that interest rates are forecast to continue to rise for the foreseeable future, increasing the cost of borrowing).
This is a round-about way of reminding first-time homebuyers to have reasonable expectations and to act quickly. Now, it is almost impossible to find a detached home in a desirable neighbourhood with a two-car garage, big yard and a pool as your first home on a modest budget. Instead, plan to work up to that by starting small and making a couple moves into progressively larger properties, helped by the equity you have built up. You have to crawl before you walk and walk before you run. I recognize it isn’t a fun message to convey but the tough thing and the right thing are usually the same thing – and it’s my job to ground clients in fundamental market realities. Don’t turn your nose up at fixer-uppers, less than ideal neighbourhoods or even starting in a townhouse or condo. After all, the next five years are going to go by regardless (and likely far more quickly than you realize); don’t delay in building equity – stop renting or sitting on the sidelines and just buy a place – get something, anything and the sooner, the better.
Remember, fortunes are made during recessions but often not realized until economic booms.
But What If I’m Too Spooked?
If you are buying and selling in the same market, then it really doesn’t matter – just be sure to factor in how quickly (or slowly) it’ll take to sell your place; the spread between what you’re selling and what you’re moving into likely won’t be that different.
Also, take into consideration the costs involved with moving and/or refinancing. Land Transfer Tax (“LTT”), commissions, storage & staging, fixes and small renos, moving, legals, banking fees, etc. ought to be taken into consideration when looking at the sum total cost of a move.
Quick Business Lesson:
Remember how your parents said that owning a home is your greatest asset? Well, that’s only partially true; ask yourself if your property makes you or costs you money every month. I suspect it’s the former and, in which case, that makes it a liability; in fact, it’s only an asset when you go to sell it. Moreover, in a buyers’ market, where properties take longer to sell (and tend to sell for less), the idea that a home is an asset is tested as it can feel like a liability when you can’t sell it and you feel the distress of holding a non-liquid ‘asset’ that is preventing you from moving on.
I recognize this blog may have hit a nerve or two – testing long-held beliefs; challenging clients to see things more objectively is part of my job as a licensed Realtor. If you’re up for some growth and curious on how you might build wealth through real estate, or wish to rebuke my opinions, I’d love to hear from you.
Reach out to me anytime – I’ve always got time for those who help themselves or who can teach me a thing or two.