HEADLINES NEGLECT THE BIG REAL ESTATE PICTURE
We hear about the “bubble” bursting, when in fact, there is no bubble. “The time to buy a condo in Toronto has come and gone,” “Are Canadian Home Prices Headed for a crash?” and “Fears rise that Canadian home buyers are in over their heads” are just a few of the media headlines that have appeared lately. As we have experienced so often in the past, the naysayers present only part of the picture. What do they leave out? That in addition to conservative Canadian banking practices that have kept our real estate market from sliding into the negative situation the U.S. had a few years ago, as of June 1, we have a higher mortgage stress test. This will ensure that Canadians with uninsured and insured mortgages can afford to pay a minimum 5.25 per cent interest rate (up from 4.79 per cent).
Yes, mortgage interest rates are incredibly historically low, but we all know that they will rise at some point. This fact is a great impetus for getting into the market now, or for right-sizing to a larger place. Rather than avoiding purchasing a new home or condo because of discouraging headlines, save as much as you possibly can toward your down payment, and do what you can to maintain or improve your credit score. Now is a great time to buy, especially before interest rates rise!