Stick to the basics in an uncertain housing market
With a cooling housing market and uncertainty about the direction of interest rates, there’s much to think about if you’re buying a larger home, downsizing to a condo in the city, or even helping your children with their first purchase.
Home prices have indeed softened as the economy has slowed. But if you’re buying with the intention of living in your home or condo, and follow some sound real estate principles, short-term market events shouldn’t be a reason to put your plans on hold.
Here are a few of the principles to keep in mind.
Look for value
Resale value will probably play a major role in your decision. You can boost your long-term return by looking for a home in a neighbourhood with upside potential, or buying a less expensive house on a good street and upgrading it.
Know what you need
If you’re trading up to a larger home, your wish list may be longer than it was when you purchased your first home. But luxuries, such as a pool, may not always translate into better resale value (renovated kitchens and bathrooms add much more to a home’s resale value).
If you’re downsizing, be sure to consider access to shopping, transportation, healthcare facilities, and entertainment. Be aware that “smaller” doesn’t necessarily mean “less expensive.” A luxury condo or a small home in a high-demand area may cost more per square foot than your current home.
Know your limits
Seek professional mortgage advice, and take advantage of online calculators that can help determine how much you can spend without straining your budget.
Get preapproved
If you’re not ready to buy and interest rates are on the move, don’t forget to get preapproved for a mortgage. This can allow you to lock in a preferred interest rate.
Consider variable rate
Locking in an interest rate is a better strategy when rates are low. However, when they are relatively high, a variable rate mortgage can allow you to benefit from future rate decreases.
Your home is part of your overall financial plan. Our team of experts at ScotiaMcLeod can help you determine how to fit a new home purchase into your long-term plan.