8: Should You Wait to Buy a Home? 3 Things to Consider

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EPISODE DESCRIPTION

In this episode, Brandon shares 3 things to consider if you're sitting on the fence and waiting to buy, and if now could be the right time for you.

 

What was discussed: → Normal range of fixed rates. → Shrinking your debt. → Maximizing leverage.

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Episode Transcript

(00:07):
over and over again.
One of those things is that it's
not timing the market, but time inthe market that matters most.
And yes, this does make sense inthe grand scheme of things.
It does little to help thosepeople who can't afford to buy
right now or are feeling anxiousabout taking the plunge.
Today, I want to go over threethings that might help you if
you're sitting on the fence, alittle bit nervous about buying,

(00:29):
and wondering if it's the righttime for you.
Number one, fixed rates have onlystarted with the three in six of
the past 25 years.
With rates currently dancing in
the 4% range, we are in what'sconsidered a normal market.
Waiting to time this and get lowerrates has a slim chance of
actually happening for you.

(00:49):
Those people waiting for massive
rate drops, well, they're going tohave a 76% chance of being
disappointed.
Number two, first-time homebuyers
often make the mistake of onlylooking at the upside of the home
value increasing.
What they fail to recognize is
that while they're paying themortgage, they are actually
getting a principal pay down aswell, meaning the debt is
shrinking.
So let's hope market prices
appreciate.
But even if they stayed flat, you
would still be building equity bypaying that loan down.

(01:12):
Number three, show me a bettermeans of leverage.
You can buy a $500,000 home with a5% down payment equaling $25,000.
According to the Canadian RealEstate Association, the average
home price in Canada increased by1.3% from February 2023 to
February 2024.
Taking that $500,000 home value,
you have a growth in equity of$6,500.
On the flip side, take that same$25,000 and invest it in the stock

(01:39):
market.
Let's say you invest in something
like the S&P 500, which peoplealways say has an average annual
return of about 10%.
Comparing the growth of the two,
with your home, your value wouldhave increased to $6,500.
With your stock investment, youwould have only earned a return of
$2,500.
Now factoring in the principal pay
down previously mentioned, and youcan see why this is a huge win for

(02:02):
you.
These are just a few examples of
how you can reframe things to seeif it's the right time for you.
I get times are scary and therecan be a hesitancy to sit and
wait.
But as you can see, waiting
doesn't always pay off.
If you are waiting, there's a few
steps you can take right now.
Look after your credit, get that
utilization down, check out ourpast episode and follow all those

(02:22):
tips.
Build up your down payment,
contribute to your RRSP and firsthome savings accounts so that
you're maximizing the taxadvantages, and really get clear
on where you want to live so youcan start targeting those
neighborhoods and build out apicture of what the ideal home is
for you.
Good luck, whether your journey is
as a renter or a home buyer.