Friday, May 29, 2009

Why didn’t you tell me?

In a few years, you will look back at this time period and say to yourself “why didn’t I purchase a real estate back then”?

Today in Richmond, you could not ask for a better time to purchase your first home or sell the one you are in now and move up to a larger one. We have the makings of the “Perfect Storm” in the Real Estate world here in Richmond.

Here are the three Key Aspects that make-up this Perfect Storm:

1- PRICES the same as two and a half years ago
2- SELECTION hundreds more houses and condos to choose from
3- INTEREST RATES at an historical low

Yes, except for a few over priced unrealistic sellers, the market in Richmond has leveled off and for the average buyer the opportunity to get tremendous value in your home purchase will not get better than it is today!

Here is a quick observation for you to ponder:

If you purchased a single family home in April 2008, average price at that time, $810,158 at a 5 year rate of 5.69%, with 5% down, add CMHC and 35 year amortization, your monthly payment would be $4,387.00

Now buy that same house today, at an average price of $742,518, 5 year rate of 3.79%, with 5% down, add CMHC fees, 35 year amortization and your monthly payment would be $3,117.00

That is a savings of $1,210.00 per month or a 27.75% savings!!!($14,520.00 per year or $72,600 over 5 years)
Question- What if I have to sell, in order to move up?

Well, it works even better in your favour to do just that in today’s market.

Here’s why:

Lets say you sell your current home for $500,000 today and move up to a $650,000 home that is bigger, more bedrooms, a garage, etc.


Four years from now, when prices are up 5%, and if prices have gone up, then you can take for granted that the interest rates have also gone up. Without adjusting for the increase costs of the future interest rate and you only focused on the 5% price increase, here are the new numbers:

Your current home in 4 years, $500,000 x 5% = $525,000
If you move up now to the house you need and then look at it in 4 years you get $650,000 x 5% = $682,500

A difference of $7,500 (and remember this is without the interest change calculated in).

Some banks will waive or discount your payout penalty or blend with the new mortgage rate for your new home.

I encourage you to give me a call l at 604-276-2335 and we can help you make the right choice and answer any questions you may have for you specific situation.

Michael Cowling