Good News Items for Those Who are Looking to Buy a Home.
In the past week or so, many other Realtors in my office and I have noticed that buyers are starting to come out of the woodwork. More buyers are asking about real estate, showing up at open houses, viewing properties, and more importantly, actually buying real estate. As the trend is only about a week and a half old, and it’s too early to apply any meaningful stats to it, and no one can say if this is an early stage in a larger shift or if it’s simply a blip on the screen. Those of us who make a living off of such things are of course hoping it’s the former.
Regardless of whether this continues or not, it is my opinion that certain changes and proposed changes by the federal government have made it easier for buyers of late. My hypothesis is that if this continues that at least some of the credit should go towards the people making the big decisions.
Most notably, are the very, no, extraordinarily low interest rates. Yesterday, I saw an advertised rate for a mortgage with a 3 year term at a rate of 3.75%. This dropped my jaw. A couple of years ago I was impressed with anything under 5.5% . To put this in perspective, with the 5.5% interest rate on a 30 year amortization on a $200,000 mortgage you would be paying $1167 per month. With the 3.75% interest rate you would be paying $952 per month. Wow.
We’ve come a long way since the early 80’s haven’t we?
On Tuesday, federal Finance Minister Jim Flaherty tabled the federal budget. A variety of of changes were proposed but here are the highlights of what will most directly affect the real estate world:
· Temporary home renovations tax credit of up to $1,350 for eligible home renovations and alterations
· Increase in the home buyers RSP plan, withdrawal limit increased to $25,000 from the current $20,000
· A new first time home buyers tax credit that will provide up to $750 in tax relief for closing costs. (Apparently things like Lawyer’s fees and home inspections are covered by this.)
· Broad based personal tax reductions including an increase in the personal exemption and increases to the limits for the two lowest tax brackets
Talk to your financial advisor for details on this.
And now it’s time for my refrain for home owners:
It’s more important that you are in a position to make your payments than it is to buy your home at such and such time in a market. There is a little room for some tweaking in the timing, but if you’re renting you’re throwing your money away. One way of looking at this is that you’re probaby still paying a mortgage, but it’s your landlord’s mortgage, not yours. If you don’t know what I mean by all of this look at my six part series on “Up Markets and Down Markets” that I posted in the fall.