It’s tough to know when to delve into buying your first home. Calgary and area is a busy part of the world, with a number of people working very long hours – often away from home – and entering the real estate market just isn’t a priority for those with not enough hours in the day. The best time to start looking in to real estate isn’t immediately apparent to everyone, but in all reality, Canada’s economic stability makes this one of the best places in the world to invest in property. Interest rates have dropped dramatically since 1982, and remain stable at less than five per cent. Purchasing property remains to be an excellent investment, and current trends show that 2013 may be a more opportune time than ever to buy.
Mortgage Planning and Your Search
Begin by finding a mortgage planner with an excellent reputation. Mortgage planning is a process where you and a home mortgage broker build a relationship based on you achieving your home ownership and financial goals. Mortgage planners can work with you to help you discover what you can afford and the best way to approach home ownership in your specific case.
Recently, a Financial Post article written by respected business reporter Barbara Shecter reported that current trends seem to indicate that home prices may soon decline. It’s good news for buyers, and may be the impetus you need to begin browsing new homes.
The reason for house prices declining is really quite simple. Shecter reports that Moody’s Investors Service, an international ratings agency, predicts a decline in house prices due to unsustainability in the market. Canada shares the distinction with Australia, Spain and the United Kingdom as countries where homes prices are “overheated”, and must come down in order to resustain the market. Moody’s measured the growth in house prices against growth of incomes and found that over the past ten years house prices have increased at a rate far greater than that of Canadian wages and earnings. London and New York-based Fitch Ratingshave estimated Canadian home prices to be overvalued by as much as 20 per cent.
What Are The Implications?
Really, there are not a lot predicted. Home prices are not expected to decline so significantly that it would cause any effect to the Canadian home mortgage securities ratings awarded by Moody’s (currently the highest that can be achieved).
Moody’s used a “variable” analysis to assess how far housing prices have strayed from “sustainable market fundamentals,” and the results showed that if an economic crisis were to occur Canada could expect to see a drop in demand for homes. However, Moody’s also studied a “fixed” factor, which took into account, “how vulnerable the consumer is to economic shocks, whether there is a large oversupply of houses, how effectively monetary policy can alleviate the shock, and how dependent the economy is on the real estate sector.” Canada fared well here because of stringent lending laws and solid global financial performance, and Moody’s does not seem to be overly concerned with over-supply in the housing marketplace, except potentially in the condominium market.
The mortgage and real estate market is strong enough in Canada that it would take a crises of proportions not currently anticipated to cause a loss of confidence of the part of ratings agencies.
And there’s even more good news in the fact that Canadians still seem to be saving, managing to stow away more of their annual savings than those in the United Kingdom – even with a high household debt to income ratio of 154 per cent.
Trends seem to indicate it’s a good time to be a buyer. To have a look at the stages for buying a home and applying for a home mortgage, Download our guide for Purchasing A Home in 5 Simple Steps BELOW!