Is now the time?
Is now the time to start looking for your new home?
Well the answer is both yes and maybe. If you are a buyer without needing to sell property then yes the time is right to start looking.
As we head into the holiday season prices tend to wain a little, before the market picks up again in the spring, and the savy buyer can take advantage. With most interested in holiday celebrations, the pool of buyers starts to diminish. As for listings yes some come off the market only to be re-listed after the holiday season. Those that are more motivated do stay on the market. This is when a savy buyer can pick up a good deal.
But I don't want to move during the holidays! Nor do the sellers so the possession date is set into the new year to allow everyone to enjoy the holidays.
Now for the maybe. If you are planning on moving up and need to sell, the best time to buy is when the market prices are down. For Example if in February of this year you where to have sold your average single family home in Edmonton you would have received $347,309 to move up to your dream $500.000 property.
Property prices increased roughly 6% from February 2009 to July 2009.
Now if you had managed to hang on to that home until July you would have received $372,741 a profit of $25,432 over February’s selling price of $347,309 a 6% increase in price.
To buy the $500,000 home that you purchased in February would now cost you, in July, $530,000 a 6% increase of $30,000.
If you were able to buy in February for $500,000 and hold on to your original property to July and sell for $372,741. There is a potential for a combined savings in both transactions, if timed right, of $55,432.
There are some serious considerations.
1) As with anything in the Real Estate market, there is some element of risk involved. The figures I have quoted here are historical but factual. Timing is key to garner maximum profit. There are normal market trends and fluctuations, which allow us to make predictions but without a crystal ball a prediction is just that.
2) If you are comfortable with the risk involved, and the prospect of holding on to the property longer than initially intended in order to see the profits you would like, then you are ready to evaluate your financial ability to carry both properties. Mortgaging both properties maybe an option if cash is required to close, one as an income property and the other as your residence, . A line of credit or bridge financing are short term options.
3) Carrying costs refers to the amount of money that is required in order to maintain, run and pay for the home you are planning on holding until prices rise. These costs can be minimized or completely covered through rental income making this a cash neutral investment.
With all this said I would be interested in talking with you whether you have a property to sell or not. This is a great time to start looking. Don’t wait til spring with everyone else.
The historical market statistics show that very early in the New Year prices start their steady climb to the fall peak.
Making your Real Estate needs my priority.
Dave Dry
www.davedry.ca
Licensed Realtor in the province of Alberta