John and Julie have rented an apartment in Toronto for more than twenty years. Mark, a residential real estate agent and Julie's friend, asked her why she still rents, when in the past twenty years she could have bought a house or condo and probably paid off the mortgage. Instead, twenty years later, all John and Julie have to show for their $240,000 in rent (twenty years x $1,000 average per month x 12 months per year) are rent receipts. But Julie said she and John never could agree on where to live. He wanted to be downtown near his work and she thought they'd eventually move to the suburbs. They liked their apartment building and thought if it went condo, they'd buy then. There was always some excuse not to buy.
Are you psychologically ready for the responsibilities that come with buying and owning a home?
Buying a home means more than simply making a monthly mortgage payment. It also means paying taxes, maintenance costs, and insurance premiums. If you buy a condo, town house, or co-op, you're also taking on the added responsibility of monthly assessments for maintenance of the commonly held property. If you're a home owner, you shoulder the burden of home maintenance yourself. If the roof leaks, you have to fix it. If the boiler breaks, you must replace it. There is no landlord to call.
As a home owner, you also shoulder the burden of real estate taxes. You become one of those home owners who support the local school system, fire and police departments, and city government. Buying a home means you're also buying into your local community. And if someone wants to put a trash dump next door to your house, you'd better be out there fighting against it to protect your property's value.
And you may be there for a long time. Although today, the first-time-buyer market is considered the "hottest'' market--meaning there is the greatest amount of demand for homes generally priced under $200,000--that could change. If it does, that two-bedroom condo you bought in a bidding war three years ago could sit for 60 to 120 days before you receive a single offer. Becoming a home owner means you are somewhat subject to the whims and tides of the market. Renters can leave at the end of their lease, or they can sublet their unit. Home owners must either rent out their homes or sell. Neither is an attractive option when under pressure.
But there are lots of benefits to home ownership that compensate nicely for any hardships.
If you work out of your home, there are a number of tax benefits, including a deduction for the costs associated with owning and maintaining the portion of the home you use exclusively for business. When you sell the home, you can roll over any profit you may have into your next purchase, provided it costs as much or more than the home you just sold.
The pride of home ownership, and the equity homeowners will build up over a period of time give the home- owner a strong emotional outlook. Owning a home is considered part of the Canadian dream. Canadians are brought up to believe in the value of home ownership and its advantages.
Once, homeowners have taken possession of their home they realize they have an investment in their family as well as in their home. Homebuyers can invite family, relatives, and friends to show how proud they are of their home. It is considered a great achievement in many families and colleagues of homebuyers. Homebuyers love the feeling that owning a home gives them. They feel a pride of ownership and a sense of security. Homeowners can do things around the home that they would not be able to do in a rental home. They have the freedom to paint walls any color they choose, or not to paint at all. They may make changes that suit their lifestyle and interests.
An additional emotional advantage to home ownership is that it gives homeowners the chance to get to know the neighbourhood. When they purchase a home, they are buying into a neighbourhood. Part of being a nice neighbour is taking care of their home so that the neighbourhood keeps it distinct flavor. This not only enhances their life, but helps keep the pride of a well looked after neighbourhood.
Owning a home also gives homebuyer's privacy. This is very important for
people today, in our busy world. Depending on the lot size, home placement,
this can be a major buying point for buyers. More and more people are looking
for privacy, nice setting, and great curb appeal. Then of course the pride
that goes with the home selection they have made that encompasses all their
needs.
Recession and Expansion
There are times when the economy is brisk and everyone feels confident about his or her prospects for the future. As a result, they spend money. People eat out more, they buy new appliances, TV's and new electronic equipment, they buy new cars, and....
Then, for one reason or another, eventually the economy slows down. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates even further. If it slows enough, we have a recession.
During such a time, fewer people are buying homes. Even so, some homeowners
find themselves in a situation where they must sell. Families grow beyond
the capacity of the home, employees get relocated, and some may even find
themselves unable to make their mortgage payment - perhaps because of a layoff
in the family. If you can you want to try and buy at or near the bottom
or on the upswing of times like these - not always obvious when the time is
right. To see how prices fluctuate see
here
Supply and Demand
When the supply of available houses is greater than the supply of buyers, real estate appreciation may slow and prices may even fall, as happened in the early eighties and the early to mid-nineties. see here
If you are lucky enough to purchase a home during a slow period, you
can be reasonably certain the economy will begin to show strength again.
At times, real estate values may even surge drastically and you have to buy
at a high time. In many regions of the country, this is precisely what
occurred in the late eighties and the late nineties. Don't worry, house
prices have always surpassed previous highs, it's just a matter of time.
You can review seasonal price
fluctuations. To see annual trends click
here.
Home ownership (read the whole story about the psychology of home ownership) is not for everyone, but the majority of people want to purchase a home as soon as they can. Some wait, but often it's just a matter of saving for the down payment. After you do all the analyzing and number crunching, you will probably arrive at the same conclusion as most people before you ... "the best time to buy a home was yesterday"
Other issues to thing about when you are considering buying a home
Only you can make the right decision for you and this is another reason why my goal is... to provide you with all the information so you can make the best decision for yourself and your family. Shall we begin?