Is 2013 a good time to buy a house in Canada?
2013 is shaping up to be an interesting year when it comes to purchasing a home the best advice I can give is to wait for interest rates to rise if you purchase a home before they raise interest rates there is good chance you going to miss out on some really great deals. Some people are saying now is the time to buy a house because interest rates are so low I disagree. Had you bought a home a few month’s after they lowered interests to near zero I would have said it was a good idea but right now in 2013 it wouldn’t be a good time to purchase a home because sellers are trying to get max dollar for their homes because interest rates are so low. However once interest rates rise most home owners are going to find themselves in debt which will contribute to home owners selling their homes for less and not only that it will contribute to lower housing prices all across Canada.
Anyone else want to get into debt?
Interest rates have never been so low however the bad financial practices of Canadians have not changed there are still a lot of Canadians living paycheck to paycheck there are still a lot of Canadians that have Mortgages, Car loans, credit card loans, personal loans, lines of credit etc. and what happens when interest rates spike is all of these loans that Canadians have go up which forces people with a lot of debt to liquidate; sure many Canadians will find a way to whether the storm but other indebted Canadians will start selling and the reason they’ll start selling for less is because their cashflow will be out of wack example if a Canadian family is bringing in $8000 per month but they’re spending $10,000 per month they will find a way to get rid of unnecessary expenses the number one expense being their home mortgage some Canadians will start renting others might purchase a smaller home or they might purchase a home in a smaller town where housing prices are lot less this and other factors will result in a steep decline in housing prices.Investors that look to the long term will purchase these homes for cheap and wait until things get better to sell these homes for a profit.
Interest rates, Interest rates oh and did I mention interest rates!
What I’m getting at is 2013 is shaping up to be a very interesting year what the bank of Canada does with interest rates and also what laws are past will determine the housing market usually this stuff is easy to call but if I was a person wanting to purchase a home in 2013 I would wait to see what Canada does with interest rates. When interest rates rise I would wait a few months and pay extra close to prices and also laws that affect the housing market. In America anyway governments allow housing prices to fall in Canada I’m not exactly sure what the Canadian government will do if this is a true conservative government they’ll allow housing prices to fall if this some sort of liberal-conservative government they’ll more than likely pass some laws to save the housing market which would mean they would take money out of peoples pockets from another area to save the housing market from crashing.
Based on what I’ve seen however I think they will allow the Canadian housing market to correct itself meaning lower housing prices and higher mortgage interest rates. As I’ve said in previous posts higher mortgage interest rates should only affect you if you’re not prepared for them meaning if you haven’t been saving or investing for your future as a home owner it’s my opinion that maybe you shouldn’t own a home or have a mortgage. Living above your means is never a good idea a lot of people lied to their bankers about their income an equal amount of people found mortgage agents or brokers that cooked the numbers for them so they could qualify for a home they really couldn’t afford. In my opinion we need to stop saving these people mortgage debt is the largest debt in Canada and the reason it’s so large is because of some sort of fraud.
The monetary laws of the land!
Again the best advice I can give is watch interest rates and also pay very close attention to the laws being passed that affect the housing market. As I’ve said in the 2012 version to this post when buying a house in Canada you should also watch what is going on in the United States and their economic recovery if America starts to recover Canada is going to be one of the best places to invest into which means the Canadian dollar is going to soar even higher than it is now. If you’re financially educated the coming years in Canada are going to be very good if you’re financial inept Canada’s soon to be growing economy is going to walk all over you. To get a better idea of what I mean even savers with higher interest rates will be winners again meaning if you’ve been saving money in your bank you will most likely get more interest on your money on the flip side if you have outstanding loans of any kind you will lose more money and you will probably have to work more.
I’m going to have end this post here because I think if you’ve been reading it you should already have an idea of what I mean when I say it’s too hard to tell if 2013 is going to be a good time to buy a house in Canada. Pay close attention to Interest rates as well as the laws affecting the housing market politics is a very interesting beast even conservatives turn into socialist just get re-elected. We’re just going to have to sit back and watch to see what Stephen Harper’s government does. Because truth be told when people start losing money even if it was their own fault they will start to blame government and being that we have a Conservative government people might start to listen more keenly on what Liberals or what the NDP have to say. As a conservative I can tell you what those liberals will say – Tax the rich, increase the corporate tax rate, save homeowners, tax the middle class, tax the poor, tax small businesses, tax the dog tax the cat liberals will more than likely tax everything they can just to convince voters to vote for them which is why Stephan Harper’s government has some tough decisions ahead of them in 2013.
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The other big impact would be on consumers borrowing money to finance major purchases such as homes and cars. Thirty-year mortgage rates remain near record lows of about 3.4 percent, which is one factor that helped the housing market bottom out in 2012, with prices finally starting to rise. A modest uptick in interest rates might spur some potential buyers to get off the sidelines and act, in order to lock in relatively low rates before they move higher. But if rates rose too much, it could crimp a recovery that’s just beginning.