Right time to buy? CMHC Jan 10, 2010 - 4:37:39 PM RSS?

1. Home Renovation Tax Credit Expires February 1st, 2010

• Up to $1,350 (15% of costs over $1,000, up to $10,000) available for purchasers buying a home requiring a little TLC or minor renovations

2. All Time Low Interest Rates

• For every 0.5% increase in interest rates, a borrowers monthly payments increase by approximately $30 per $100,000 in mortgages. There are a number of economists forecasting a 2 to 3% increase in the next 1 to 2 years.
• The Bank of Canada has openly said they want to keep rates low to assist in stimulating the economy, but also said they are keeping a very close eye on inflation. So rates are great today but the million dollar question is for how long will this last?

3. Housing prices on the rise

• The average price of a home sold in October was up more than 20 percent from the same period last year, going from $341,079 in October 2008 to $409,295 in October 2009 according to the Canadian Real Estate Association.
• The number of homes that sold also increased dramatically, jumping 41 this October over last. Maybe there is some logic to why Warren Buffet is one of the richest people in the world, didn’t he say last fall that it was a great time to buy. I believe his quote was something like when those around you are scared, buy and when they are feeling confident, sell?

4. Increasing demand for Real Estate

• Baby boomers are the largest group of buyers and have the highest rate of home ownership and wealth and are looking to buy more Real Estate in the next 15 years
• New Canadians - 17% of new immigrants to Canada buy a home within the first 6 months and over half within the first 4 years of living in Canada
• More money is still to be spent in the stimulus package than has been spent so unemployment with turn back and with that consumer confidence will rise putting more people in a position to buy
• Housing starts dropped dramatically over the last 2 years and there will be a lag before new product is available again so the demand for existing inventory will increase. We have already flipped from last years buyers market to a sellers market because of the drop in listing inventory and it will likely take a least 1 to 2 more years to catch up again with new inventory.

Sources: CMHC, CREA

Suggested Resources

Canadian Mortgage Calculator - Calculate mortgage payments, amortization schedules, interest costs and more. The more you play with it, the more you�ll see what it can do.

GDS and TDS - Understanding your GDS and TDS is an important part of your borrowing ability.

Switch your mortgage  - is switching your mortgage a good idea? You decide.

Fixed or variable rate mortgage  - How's your adversion to risk? Which option do you choose?

Synergy Mortgage Plan - Mortgage solutions for Canadians.