If you’re sitting there waiting for home prices to drop, KNOW THIS …
Historically, TWO things happen in a declining market:
Banks will require a bigger down payment
Interest rates increase!
Which means you would be paying MORE INTEREST in the long run AND you’ll be paying thousands more dollars more for a BIGGER DOWN PAYMENT
…which defeats the purpose of saving money!
Don’t chase the market ♀️
** REAL LIFE EXAMPLE **
In 2019 clients have the ultimate goal of putting 20% down on a purchase of appx $450,000. That would equal $90,000 to save.
They had $50,000 already.
In 2020 they had saved another $20,000 (no small task in a pandemic) in addition to paying $1100/mo in rent for their basement suite.
That rent = another $13,200/yr that was spent.
So they now had $70,000 BUT the neighbourhood they had their eye on had appreciated in value because it has a lot of young families and commuters in the demographic.
The price range was now $510,000 or so, which means that they now needed $102,000 down instead of needing $90,000 and they were $40,000 away from buying based on their goal (20% downpayment).
They were in fact, stuck chasing the market.
We had to sit down and really think things through, and reassess their goals so they could see what might be in their best interests. In this case, putting less down now to get their foot in the door was a much better option that spending their hard earned money continuing to sweat it out paying rent, expenses AND scraping funds together to save for more downpayment.
Helping you to STAY INFORMED and inspired to do better for yourself!