I often hear comments about why home sellers and buyers are frozen in their tracks right now. Here are some of the things I am hearing and my responses on why it might not all be true:
Comment:
It's not the time to buy.. prime rate is dropping and I will wait until it hits bottom.
Response:
If you have a crystal ball, I would love to borrow it! Having a husband who is a mortgage specialist in Lethbridge, I have learned that even those in the know don't know when, how much and what direction rates will go. This excerpt from yesterday's Toronto Star says it all:
"Canada's big banks passed on the full value of the Bank of Canada's quarter percentage point interest rate cut yesterday, making it cheaper for consumers and businesses to borrow.
"The outlook for growth and inflation in Canada is now more uncertain than usual," the bank said in a statement after reducing its overnight rate to 2.25 per cent.
Canada's big banks followed suit late in the day, cutting their prime lending rates, the basis for many loans, to 4 per cent.
What kind of insanely cheap rate are buyer's looking for... it really doesn't get much better than this does it? Good rates, hundreds of homes to choose from... take your pick!
Comment:
It's not the time to sell. My home's value is not at it's peak and I will wait it out.
Response:
If you are moving laterally within a market, you aren't going to feel the effect of a lower market value of your current home as you will be replacing it with a home valued within the same type of market. We all know that real estate is cyclical. If you are looking to upgrade, you will make your money in your next home when the market swings upwards again. And what a fantastic time to buy... have you ever seen a better selection!
Comment:
The economy is tanking and I will squirrel my money into GIC's and bonds rather than invest in real estate.
Response:
Are you aware that Lethbridge currently has a 0.8% vacancy rate? Are you aware that rents have been steadily increasing and that all you need to do to get your property rented out is whisper to your neighbor that you have a home for rent? Oh, and did I already mention that it's ridiculously cheap to borrow money right now?
So, If you really must wait, then do so. I'm not sure who said freeze or why...but I would suggest looking through the cloud of bad press and eternal pessimists and see the golden opportunities lurking.
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Liz, well said from a Canadian perspective. My only comment is that although the prime has gone down, the spreads have in effect gone up because the banks are doing few if any loans at prime these days.