Being Smart Means Making Calculated Decisions
We all wish we can see into the future before we make a decision. The two things that are next to using a time machine are studying the facts and making a calculated decision. And that is what anyone would suggest when making the biggest purchases of our lifetime, our home and investment properties. So let’s look at four things we know today.
1. We know that through the 2008 housing crisis and the 2020 pandemic crash, the Vancouver real estate market stayed resilient. Additionally, over the past 10 years, we see an average return at about a 100% price increase (source: the Real Estate Board of Greater Vancouver)
2. Comparing the market price and interest rates, we see that there is a correlation. Low interest rates usually drive up buying demands and promotes price increase. When interest rates are high, it affects pricing negatively. But we cannot assume an increase in affordability based on these two factors alone. What we do know is that the two can compensate each other, meaning your bottom line, the monthly mortgage payment stays relatively the same with the same home choices available in the market.
3. Even with all resources from major institutions and banks, they still don’t have a proven track record of accurate predictions on the market and pricing. This makes it near impossible to pick a top and bottom of the market.
4. When buying a pre-construction home with a completion date within 2 years, lenders and banks are likely to provide you with a commitment letter to secure an interest rate you are qualified for today. Moreover, there are programs that allow you to renegotiate rates should the interest rates come down by the time your home is built. Giving you more options and an advantage.
Based on this information, the sooner you have the pricing and mortgage rates in place, the more options you will have.