Why would you buy a property this year?
Where We Were….Where We Are…
Where We Could Go
SO WHAT IS THE BENEFIT IN A WAIT AND SEE APPROACH
Home Value 5 Year Rate Payment
Past: $342,746 5.94% $1,886.
Present: $297,826 3.79% $1,276.
What if this happens?
Future: $282,934 5.94% $1,557.
In January 2008 the average single family home sale on the MLS was $342,746 in Red Deer. In the same month for 2009, the value decreased to $297,826. The interest rates used in this example are based on a 5 year fixed term mortgage amortized over 35 years.
The present mortgage rate is as at January 8, 2010.
If property values decrease by another 5% and if the rates rise in the later part of 2010 early 2011, then you would have been better off to purchase at the prices today when you are guaranteed the lowest rate in history (based on the Bank of Canada average residential mortgage lending rate). We are not predicting the future, merely giving you an idea of what could happen if property values drop and interest rates go up. The question to ask yourself is “would it be beneficial to purchase now when interest rates are at a record low or wait for property values to decrease more”?