Home buyers to benefit from possible real estate slowdown
A chief economist at a mortgage broker network said a slowdown in real estate sales has provided potential home buyers with an opportunity to take a respite in what has been an emotionally charged market.
Dr. Sherry Cooper of Dominion Lending Centres advised purchasers to take this time to assess their financial situation and what they can realistically afford, as well as confer with an accredited mortgage professional about all the costs of owning a home.
“This is a good opportunity to save more money for a down payment, and give markets a chance to adjust to what I think will be a slowdown in price inflation and in activity,” Cooper said in an interview.
“Figure out what it would cost you, on a monthly basis, to live in the home you are about to buy and then imagine what your lifestyle is going to be, because in order to meet the rising costs of owning a home, you are most likely going to have to cut back on some of your other expenditures.”
Cooper said prices will likely continue to climb at a modest pace as new housing starts are not keeping up with new household foundations in Canada. She does not anticipate a price decline, particularly the kind of steep decline that would allow average families to afford single-family homes in cities like Toronto and Vancouver.
“The kind of price decline you would need to make a home affordable for the average person in those cities would actually be extremely negative for the economy. That would be extremely negative for the average person, because they could lose their job. It’s partly a matter of ‘be careful of what you wish for.’”
Cooper welcomed the slowdown in price inflation, as bidding wars often lead purchasers to make irrational decisions, leaving them vulnerable to spending more than they can afford.
“Often it becomes so emotional and irrational that it becomes very tempting to go beyond your real comfort zone in terms of affordability,” Cooper said.
Home buyers looking for an affordable home may consider moving to a smaller community, such as in cities like Mississauga and Whitby in the Greater Toronto area; and Port Coquitlam and Maple Ridge in Metro Vancouver.
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