Helping Frustrated Renters Become HAPPY Homeowners
March 9, 2018
                            No. 236
Is This A Good Time To Get Into Home Ownership?

That’s a question that many are wondering about. They wonder what’s happening in the market. Will it go up or down?

The Canadian market, overall, has softened over the last couple of years. That softening was triggered by the federal government imposing rules that buyers seeking mortgages needed to qualify at a rate two percentage points above the one they would actually get. They put in the policy to prevent people being caught in unmanageable debt if rates started rising.

And then they increased interest rates, starting in mid-2017. Since then, they’ve raised them four more times, the last one in October, 2018.

Those measures, plus the disincentives they imposed on foreign buyers to keep them from driving up the market in these parts, had its intended effect.

The overheated market cooled down fairly quickly. But the heat wave did not just suddenly end. It had its ripple effects. Many who had been priced out of the Lower Mainland, moved out to the Valley or the Okanagan. Those who couldn’t afford those markets moved further afield. Hope got hot. Kamloops got hot.

In response to these pressures, Fraser Valley Rent 2 Own expanded our operational areas, as well. Last year we did several rent 2 owns in Merritt and Logan Lake, some of them from people moving from the Fraser Valley and the Okanagan. We get many applications from those areas, and areas even further afield.

Those markets are now hot, despite the tougher qualifying criteria and the elevated interest rates.

So, where is this all heading? To stay on top of the financial environment, I get daily information on economic factors affecting exchange rates, inflation, monetary policy, etc. Experts provide hard data on issues that affect the economy and insiders give their best guesses as to what to anticipate.

Right now, it really is a guessing game, because no one knows what to expect. They do know that, counter to earlier predictions, the continued interest rate hikes have stalled. Rates were expected to go up in January and then once or twice more this year.
They didn’t. Now, some are predicting another bump in the fall, but not sooner. Others are saying there will certainly not be any more hikes this year and may even be a drop (Thursday morning’s update). But no one knows.

In Canada, a lot depends on the strength of our dollar versus the US dollar. And that is heavily influenced by the price of oil. The Bank of Canada may be inclined to bump up rates if the dollar drops too much, even if the economy, or the housing market, is not hot.

All the uncertainty leads to a market that is, overall, relatively stable. Housing prices are not likely to come down in such a market but to hold their own. Any drop—and it should be pointed that even a “crash” is usually not much more than a small decline—has probably already occurred in the formerly hot markets. The areas still in high residential growth mode may continue to experience that for a while longer before that heat wave fully dissipates.

So, is this a good time to invest in a personal residence? If you’re in an area where the drop has already occurred, it is probably not wise to wait for a further decline. If you’re in an area that is still experiencing growth, then now may be better than later, as it will only get more expensive to get into the market then. And purchasing now, will let to take advantage of any further growth.

At least, that’s how I see it . . .

We’re here to help you if you desire to get into the market but are not yet in a position to qualify for a mortgage at the bank. As long as we both have confidence that you will get there over the period of a few short years.

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Award-winning* Fraser Valley Rent 2 Own is a founding member of the Canadian Association of Rent to Own Professionals (www.CAROP.ca)
* winner of all-star awards, 2012, 2014, 2015 at the Rent 2 Own Summit.
Quote of the Week:Our lives improve only when we take chances — and the first and most difficult risk we can take is to be honest with ourselves. – Walter Anderson
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