As a real estate agent, I hear this all the time. We’re going to put the search on hold for a bit as we would like to save for a larger down payment. This might make sense if you don’t even have the 5% down payment and closing cost and still need to come up with that as that is the minimum requirement when purchasing a property. Well if you are looking to purchase a place over $500,000 than you will need 5% on the $500,000 and 10% on any amounts over $500,000.
At the rate the market is heading, it might make sense to jump right into the market if you have the minimum down payment and are “ready”. Hear me out on this one and look at this from a bigger picture.
Say you are looking for a detached or semi house that is $650,000. As of February 2016, detached and semi homes have increased 16.1% from last year. Let’s assume that this house will appreciate at the same rate (it might be even higher as we are in a very active market) until a year from now. That means the same house will cost $754,650. So unless you can save $104,650 or more in a matter for 12 months, you might not be able to afford the same house in a year’s time. This is not even including all the rent you paid to help with your landlord’s mortgage!
Year 2016 2017
Sold Price $650,000 $754,650
You might think that the condo market is safe from these huge appreciations but this is furthest from the truth. As of February 2016, the average condo price have increased 13.4%. So that means a $400,000 condo will cost about $453,600! That's a year increase of $53,600! I know that most people cannot save this much in a year, it's just not possible.
Year 2016 2017
Sold Price $400,000 $453,600
The numbers tell the truth, if you are ready to make the plunge, I would suggest you do it soon and give us a call today!