Pre construction condos oakville . Five factors in deciding whether to buy a house or not. Some “experts” say that Canadian house prices are too high and the real estate bubble is about to burst.
The central bank governor warned that Canadians are too indebted; data show that inflation has reached 3.7%, interest rates are about to rise, and the housing market is bound to fall. no, no, no. no, no, no. For potential first-time home buyers, whether they should buy a house, especially now, has become a headache. As early as 2009, the “expert” predicted that Canadian real estate would follow in the footsteps of the United States-at least half of the price drop, and people who believed it had not seen house prices fall so far. Consumers have no control over house prices and interest rates, and whether they should buy a house or not depends on their own situation, not news or rumors. Recently, the Global Times published an analysis of six factors in deciding whether to buy a house, and if these factors match, it is time to call a real estate agent.
First, whether you are ready to take responsibility. With a stable income, deciding whether to take responsibility is the most important issue. These responsibilities include: paying government rent, maintaining and maintaining the house, paying the mortgage loan, and living steadily for a certain period of time; the down payment, legal fees, transfer fees, moving expenses, decoration expenses, electrical appliances and furniture expenses have been settled; the place of work and residence will not change in the near future. Only when these psychological and financial preparations continue, can we consider buying a house. For Chinese immigrants, whether to live in Canada for a long time and when to transfer their children’s education to Canada are the decisive factors in deciding whether to assume the responsibility of the homeowner now.
Second, if the monthly expenditure after buying a house is less than the monthly rental fee, you can consider buying a house. The household expenses after buying a house with a loan include: loan interest expense + government rent + (management fee) + water, electricity and gas expenses. According to the current floating interest rate level, even if the repayment period is set to the longest 30 years, the proportion of interest payment in the monthly contribution is less than 50%, that is, if the monthly contribution is 1000, the interest is less than 500. When Canadian property prices fell sharply by 12% in a short period of time in 2009, the central bank’s interest rate fell to an all-time low of 0.25%. Many consumers found that buying a house was much less than renting, and smart buyers took action immediately. Instead of waiting for the miracle predicted by “experts” (house prices will be halved again), the Canadian real estate market immediately came back to life. Many people think that there is a bubble in the Canadian real estate market, but the author always believes that if it is a demand-driven price rise, it is not a bubble. Some people count all the mortgage loans as household expenses, but in fact, the principal repaid only turns the cash assets into housing equity (home equity), rather than expenses.
Third, the buyer’s market or the seller’s market is an important factor in deciding whether to buy a house or not. If there is a strong demand for a house in the market, the property listed for sale will be sold quickly, which shows that it is a seller’s market and the buyer does not have much opportunity to bargain. If the supply of housing is large and the market is slow to digest the existing housing supply, it means that this is a buyer’s market, and buyers have the opportunity to bargain with sellers, sometimes getting a big discount. In general, the market is relatively light in winter and summer, and the market is not active enough to benefit buyers, while frequent transactions in spring and autumn are beneficial to sellers. When interest rates rise, purchasing power weakens, housing supply exceeds demand in the market, usually a buyer’s market; when interest rates fall, stimulate consumption, demand is greater than supply, easy to form a seller’s market. Prepared buyers have to wait for a chance to get a good deal.
Low interest rate is the best time to buy a house. In the case of low interest rates, the amount of loans will increase with the same income, so buyers have more choice. While house prices fell in 2009, interest rates fell to an all-time low, and consumers with stable incomes found their choice of property within reach and entered the market one after another, and the Canadian property market took a turn for the better. Low interest rates also mean that the cost of owning a property is lower, with a loan principal of 220000 yuan, with an annual interest rate of 4.2% to 4.5%, with a difference of 14000 yuan over 30 years.
- Adequate down payment. In addition to loans, buyers have to pay at least 5% down payment. For banks, the higher the proportion of the down payment, the safer the loan; for buyers, the down payment is actually an investment. The more investment, the less borrowing, the less investment, the greater the leverage of investment income. If the down payment is less than 20% of the house price, the bank will think that the loan is too risky and require the borrower to buy loan default insurance. If the down payment proportion of home buyers is too large, the proportion of household liquid assets will be reduced, the profit margin of investment income will shrink, but the loan cost / interest expense will be reduced. In short, the amount of the down payment depends on the risk preference of consumers. Some people dare to buy a house if they make a down payment of 5%, while others hesitate to make a down payment of 50%. The author believes that under the controllable risk, only when the down payment plus loan is enough to buy a house, it is best to buy it as soon as possible.
If the above five factors are at the same time, that is the best situation. The psychological and financial preparation of property buyers is the most important, and the macroeconomic situation and price fluctuations in the housing market can be used as a reference. Buying a house without being ready to take responsibility is the biggest risk. In terms of interest rates alone, the current inflation rate of 3.7% is higher than the fixed interest rate of one to three years and the floating interest rate of five years. It can also be said that, taking inflation into account, the actual interest rate of partial-term mortgage loans is negative. As for the real estate bubble, the author thinks it is groundless. If we look at the people around us, we can see whether there are more people who buy houses or invest or even speculate. The Canadian government has been tightening mortgage lending policies since 2009, especially for real estate investment. The main reason for the active trading in the property market is the demand for self-housing and the policy of low interest rates.
