First quarter for 2018 is shedding positive light on home ownership and first time buyers.
by Arie Buzilo
The real estate market in 2018 is off to a good start! Our paradigm has shifted due to the stress test and interest rate increases, but there will always be advantages.
Sellers have had a pretty good run in the last few years. Prices have sky rocketed, sending almost every property into a bidding war. Prior to the stress test and rate increase, it would be much easier to get approved for a mortgage and a much higher amount. It was also helpful that the interest rates were at an all time low. So you’re probably sitting there and thinking, how is this good for first time buyers? Well, since the government changed the rules and applied the stress test, property value has dropped significantly.
Another factor that is now playing a role on the cool down effect is that the Bank of Canada has increased interest rates.So, although it is true that the bank is not lending as much as they did before the stress test, it is also important to note that since property values dropped, buyers are able to purchase properties for significantly lower than when they had a higher approval without getting into a bidding war. What we have now is a more balanced market.
Getting your foot in the homeownership market in the city is very obtainable. Condos come in various square footages, which make it possible to afford to live in the city.
My advice to anyone who is considering getting into homeownership is to think of real estate as a long term investment. When you think about real estate, remember that there will always be cycles. Real estate is very dimensional. Some facts to consider — new and old communities developed and undeveloped, distance from the city, highrise and lowrise properties, location of commercial businesses or the potential of development, and so on. The bottom line is there are pros and cons to every scenario so for all the first time buyers that are on the fence I say, this is a great time to get in to the homeownership market.
|Arie Buzilo is a real estate Broker and an investor specializing in buying and selling properties all over the GTA.
He works out of Century 21 Leading Edge Realty.