It’s a new year, and I know some of you are looking to make your first home purchase. I’d firstly like to commend you for making the decision to invest in your future! As I have mentioned in previous blog posts, 2019 will bring some excellent home buying opportunities as our market is in a period of correction. To make sure that you are making the best decision for your family, I wanted to highlight 5 common mistakes made by first time home buyers.
Not going out and getting a pre-approval
Searching for a property before getting a pre-approval is like going shopping with a credit card and not knowing the limit. So before you set foot into a home, make sure that you sit down with a trusted mortgage specialist to find out exactly what you can afford. It is important to shop the rates, do your research and find a trusted representative to work with. They will look at your bank statements, debt load, notice of assessments, income, investments, and so on.
Think practical; not emotional
This is probably going to be one of the biggest purchases you’ll make in your lifetime. Therefore, you want to make sure you are making a practical, educated decision about where and when to buy your first home. Ensure that you are purchasing in a good neighbourhood that easily accessible with amenities nearby. Remember that your first home may not be your forever home, so you want to think resale value above all else.
Make sure that you are aware of the conditions that you are including in your offer. They are your protection should the property or terms not meet your standard. This is where working with a realtor is essential; they will advise you what to include/exclude to make sure you’re covered.
Hire your own real estate agent
Remember 99.9% of real estate transactions the seller pays the realtors commission. Therefore, I always advise hiring your own agent who has your sole interests in mind. They will act as a second set of eyes to highlight the pro’s and con’s of properties, which will be valuable in the decision-making process. At the end of the day, its someone working for you.
Don’t forget to factor in closing costs
You’re at the end of your first home buying experience, and the keys are almost yours. At this point, a lot of people forget the additional costs of closing a house. There are lawyer fees, deposit to utility companies, movers, property taxes may be applicable, etc. Be sure to have a buffer within your budget to factor in these costs, as they can be substantial.
Interest rates; certainly a big topic of conversation as we saw policy changes throughout the country in 2018. Ever since the benchmark interest rate was increased by the Bank Of Canada, economists, policy-makers, bankers, and realtors have been warning Canadians to expect more increases as we progressed through the year. It was forecasted that there would be as many as three more hikes by the end of 2019.
But with current market conditions, prices of oil plummeting, and talk of a recession in the states, the outlook has quickly changed. At present, there is not a single hike priced for 2019. In fact, the bank has downgraded its expectations for the Canadian economy this year. Stephen Brown at Capital Economics predicts the slump in the worlds price of oil could be enough to take the wind out of Canada’s economic sails, slowing GDP growth to just 1.5 per cent this year. This is well below the two per cent growth the Bank of Canada was forecasting as of October when it nudged its rate up to where it is now at 1.75%. If the oil and housing markets continue to drag growth, increased interest rates are very unlikely, and the odds of rate cuts will rise in the coming quarters.
The market in the Greater Vancouver area is nothing short of a roller coaster ride. As an industry professional, we have to stay on top of micro and macroeconomics to ensure we are providing our clients with the best advise possible. Be sure to follow along via our blog and subscribe to our monthly market analysis reports to ensure that you stay on top of the current market trends.
With pricing adjusting across most segments in the greater Vancouver area, housing is becoming more affordable. Although buyer stress tests decrease purchasing power, it is important to link up with an experienced and knowledgeable mortgage advisor and realtor to help you navigate this complex market. Make sure that you shop the rates and do your research!
It is now more important than ever to ensure that you have an effective sales strategy in place to ensure your property is well advertised to receive top dollar. An effective online presence that makes your property stand out amongst the competition is imperative as we head into these difficult financial times. We are now technically in a buyers market, so being a savvy seller and having someone to educate you on current market trends is critical.