November 20, 2015
Kevin Lutz: To buy or not to buy in 2016
Ask yourself a few key questions before you decide when and where to buy your next home
Is now a good time to buy? That’s what every prospective home buyer wants to know. There is plenty of information in the media these days about the affordability of homes in Vancouver and British Columbia. While homes are definitely expensive, low mortgage rates continue to help young buyers find an affordable first home.
Everyone who is thinking about buying a home should ask themselves these questions: Where do I want to live? Can I settle for a smaller home in order to live in the neighbourhood I desire, or will I sacrifice location for square footage? Am I ready to make the leap from renting to owning?
These questions should be given as much consideration as real-estate prices and mortgage rates when deciding whether or not to buy a home in 2016. There is no simple answer to the question of when or where to buy because so much depends on individual preferences.
Market factors in 2016
According to the latest provincial outlook report by RBC Economics, B.C.’s economy is expected to remain strong in 2016, with real economic activity expanding from 2.9 per cent in 2015 to 3.1 per cent in 2016.
“Thanks to the strength of its consumers, British Columbia continues to maintain its position at the top of the provincial growth rankings in 2015,” said Craig Wright, senior vice-president and chief economist for RBC. “While softer growth prospects in Asia are tempering activity in some export-oriented sectors, domestic demand continues to benefit from rising housing valuations, low gasoline prices and relatively inexpensive borrowing costs.”
With low interest rates boosting resale activity in the already frothy Vancouver market, and with sellers holding the upper hand in the supply-constrained market, home prices in August 2015 saw their biggest annual increase since 2010 at 12 per cent. “Against this backdrop, homeowners in the province ramped up renovation activity and construction of new homes gathered speed with few signs that the housing boom will ease in the current low interest rate environment,” said Wright.
What does this mean for potential home buyers? For people who have been timing their entry into the housing market or for those looking to upgrade their homes, the current trend of rising house prices might be a sign to act. With interest rates still at record lows, now more than ever, prospective home buyers should speak to a mortgage specialist and a realtor so they can feel confident about buying a home that they not only love, but one they can afford.
Get pre-approved for 2016
By getting pre-approved for a mortgage, prospective home buyers can shop with confidence when looking at homes that are within their budget and act quickly and confidently when they find the right home — something that’s crucial in today’s quick-moving market.
Pre-approval is one of the best steps a home buyer can take. Not only will it help you make confident offers, but it also gives you a clearer picture of what financial life will be like after the purchase. You will know in advance what price range you can afford and what your payments will be. Pre-approval costs nothing and does not obligate you. It also provides you with a guarantee of the current mortgage rate for a minimum of 120 days while you look for a new home.
Kevin Lutz is RBC
Regional Sales Manager,