Ok, we are in big doodoo. The dollar ain’t a dollar any more and the housing market in BC is on hold and even though we did not have the sub-prime mortgages the situation in the states is effecting our level of panic.
So what should you do?
First of all, stop freaking out. The answer is the same as it ever was. Buy when it is right for you. You cannot put it off until prices are better because when prices are better other things change. Interest rates may be higher, the state of the dollar is less stable, who knows what will change.
The most important thing is that you do not get yourself into a situation that if the interest rates go up you cannot pay your mortgage. The best way to fight this is to put a minimum of 20-25% down – more if you can. You will be able to get the lowest mortgages with this kind of down payment and will not have to pay a premium on the mortgage.
The second thing is to not buy a property that stretches your finances over your comfort zone. Say the mortgage person says you can get a mortgage for $400,000 but with taxes and maintenance you will have to fork out close to $3,500 per/month. If this will be hard for you and will involve your partner working when you wanted to have a baby, consider a less expensive alternative. Then if mortgage rates go up you will still have a bit of leeway before you would have to move the baby into the hall closet and rent the extra room to a home stay student to make ends meet.
The last consideration is time. Buy because you want to live in a place that is your own. Where you collect the benefits of the rent and no one will kick you out if you paint your bedroom black or listen to Abba at 3 am. Do not buy to make a fast buck by putting in laminate flooring, painting the walls red and selling for $50,000 more in three months.
Buy because the place you are living is no longer suited to your needs and it is time to find a better place for your new situation whether it is because you are having a baby or your kids have all moved out and you are tired of keeping up a 5 bedroom house for just the two of you. If you are buying for investment, plan on doing the work yourself or keeping the property long enough so that inflation gives you your profit. And buy a place that you can rent out and still cover your bills if when you are ready to sell the market is low.
And, don’t panic. Our entire economic system is not going to crash and your little piece of heaven is still out there.
When you ask the price: “Are you buying or selling.”
