Real Estate Prices - Up or Down?
Monday Dec 04th, 2017
Everyday I talk with current homeowners, interested buyers and sellers. The number one question is "Are prices going to go up or down in 2018", well if you know someone that can guarantee the answer to that please have that person contact me, I would love to hear how they can quarantee that.
Check out this chart Prices from 1971 to 2016
Here is a list of questions that I think most would be real estate buyers and sellers run over and over again in their head, especially people who are buying for the first time.
I get it; the whole thing is a scary experience - or at least it can be.
With the right frame of mind and not buying or selling under duress, the first thing to do before deciding whether to buy or sell or both is to remember to BREATHE.
Real estate, houses, condos, townhouses, agents, buyers, sellers, the internet, mortgages, banks, business...none of it is going away.
Are interest rates going up? They likely will. If they do go up it won't be enough to make a real difference in the prices.
Yes the new 'stress mortgage test' is real and technically it will effect about 16 to 20% of the buyers purchasing power. Will it have a lasting effect? No, because like with any change, we adapt. The market will adapt.
We are fortunate, we still have record low mortgage rates.Believe it or not I sold houses when mortgage rates where at 18% or more.
Here is a comparison.
Monthly payment on a $500,000.00 mortgage at 18% is $7,332.00
Monthly payment on a $500,000.00 mortgage at 2.69%(still available) is $2,287.00.
Both examples have an amortization period of 25 years, 5 year fixed rate.
The three main components that determine the real estate market are; the cost and ease of borrowing, the increase or decrease in the size of potential buyers, and the amount of available inventory - listings.
There is an ever increasing number of potential buyers, the cost of borrowing is still very affordable, the ease may have just been made a bit more difficult and the amount of inventory, or available listings still remains somewhat low.
This is what they call a 'balanced market' or at least very close to one.
Thanks for reading. I look forward to hearing from you.
TD Bank senior economist Michael Dolega is quoted as saying the market looks good “after some near-term weakness, likely to last into mid-2018, activity should begin to rebound thereafter given the fundamentally supported demand related to strong job growth and strengthening wage dynamics.”