6 TIPS FOR BUYERS IN A SHIFTING MARKET
The market peaked this spring as aggressive interest rate increases clawed back buying power combined with unsustainable, month over month price increases fuelled by bidding wars.
Now that the peak has passed, it is a far more attractive market to shop for a home as a buyer (and REALTOR®️!). Stress levels have dropped from a consistent 10 to a much more manageable level. This new market creates new opportunities for buyers, however, the same rate increases that have driven the correction have also translated to far less purchasing power for buyers. That's why understanding what you can truly afford and having all your ducks in a row is more important than ever.
1. Hire a REALTOR®
Don’t navigate this market alone! Every buyer deserves professional representation and honest advice; someone looking out for their best interests and above all else someone they can trust. Check Google reviews, authenticity in their website, social media pages - seek out someone who is experienced, professional and approachable.
2. Mortgage pre-approval
There's how much you can afford to spend and then there's how much you SHOULD spend. These two things are not always the same and require some due diligence on the buyer’s part. Investigating the cost of borrowing, having a monthly budget and getting a mortgage pre-approval and interest rate hold is an important first step in the buying process.
When interest rates were near historic lows, buyers bought more freely as money was cheap. The risk tolerance that drove the crazy market is no longer there as substantially higher rates have clawed back buyers' purchasing power. I've always said if you can't afford a mortgage at a 5% interest rate then you're spending too much, and that’s still true today.
For first time homebuyers, remember a pre-approval number is just a qualifying amount, it doesn’t mean you have to spend that whole amount. Building long term wealth as a homeowner takes time, and buying real estate and building equity is amazing, but not if it makes you house poor.
Once you have a mortgage broker on your team, it's important to keep in regular contact with them, lean on them to be a resource who can help you keep a close eye on your lending costs as rates rise (they're calling for another increase before the end of 2022) and be a sounding board so you can make informed decisions when offering on a property (monthly payment and down payment sizes etc.). I know several of my clients will send their mortgage broker the MLS sheet before we offer and ask their opinion about the finances. You cannot over prepare!
3. Prioritize location
Do not compromise on this! It’s hard to make a bad investment long term when buying in a great location. I am an expert in helping people figure out what they need and want due to my long time in the industry. I will highlight pros and cons which you may not have considered, to help you make the best choices.
Having a guide to help you sift through this is invaluable. For example, maybe you think you want to be in a more rural setting until you must make a 45 minute round trip every time your children have an event, or you need milk and realize you're driving for 2 to 3 hours a day.
4. Consider resale
Is this a short or long term investment? Short term investments need to be looked at differently than long term ones.
If you are planning to live in or rent the property for the long term, then it’s less risky from an investment perspective to buy something outside the box or more unique.
If you plan to resell within a shorter period, you should consider a property with as wide a market as possible.
Ask yourself is the home and/or property appealing to the general market? Good floorplan? Desirable schools and services nearby? Transit nearby? Busy road? Safe neighbourhood? There are many factors to consider.
5. Be measured
Don't rush the process, more inventory is coming on each week, only buy if it feels right . You will know!
6. Be discerning
Does the property meet your search criteria? Are your top 3 items on your wish list checked off (floor plan, sun exposure, location for example)?
So how do you win in today’s market? I'll help you source competitively priced homes to pursue, while at the same time looking for opportunities from listings that have sat for a while. Many have been priced too high for the market, which might present an opportunity for us to negotiate a sale. The trick is to plant as many seeds as possible while continuing to watch for new listings. When we pursue this strategy it's only a matter of time before an opportunity presents itself!
Let's start with a phone call to discuss your plans. Buyers need support and guidance more than ever to achieve their goals comfortably and within their budget. You can trust me to have your best interests as my top priority.
- Meredith
