Losing The Waiting Game
Why it may cost you more to wait than to buy right now
The question of whether to buy now or wait has always been prevalent, but possibly never so much as the past 5 years. It is a question I get asked every day and my answer has always been the same, and, in my professional opinion, the right answer. Buying sooner than later tends to be a better decision. Especially for those upgrading or buying their first home.
Let me preface my reasoning by saying that I NEVER want anyone to buy a home if they are not financially prepared. Being very ‘house poor’ is not a way to live, unless there is a long-term gain that is served by a short-term pain.
Three years ago I had one first-time buyer, let’s call him John, call me and tell me about an article he read in a magazine that penned something called the “Dulcimer Effect” or similar ridiculous term to scare its readers (and in turn sell advertising) so he would not be buying. He wanted to wait for the sky to fall and then buy a big home for pennies on the dollar. Of course, this never happened and now the market is out of his reach and John is forced to remain in a home he hates with four roommates.
Had John bought a home when we first started the process, he would be enjoying $45,000 in appreciation on that home right now. This is on an inexpensive home, mind you ($350,000). Add to that the principle he would have paid down on his mortgage and John would be looking at a gain of $60,000 over renting.
Adding to the downfall of playing The waiting Game, the same home John wanted three years ago is now selling for 15% more, but he has only been able to save an additional 3%, forcing him to consider a lesser home, or a smaller condo. It would be an understatement to say John is regretting his decision.
Interest rates won’t be climbing anytime soon, and when they do in the future, it will be a very gradual increase, according to the Head Economist for TD. Toronto continues to enjoy steady immigration and the rental market is hot with very low vacancy rates. Real estate will continue to be a good investment for the foreseeable future.
I help people like John work through their personal situations all the time. Sometimes the right thing is to buy – and sometimes it’s not. My advice will always be what is right for you. If you’d like to talk about your own situation, feel free to get in touch!
It’s all about you :)