Now is the Time
We may not be able to do anything about the financial problems of our neighbours to the south, their angst over who will be leading them the next four years, the difficult war that has drained trillions of dollars from their economy, but we can dispassionately examine what is happening in our own backyard. I maintain that this could be one of the very best times for people in the Midwest to trade real estate. In fact, I am going to go out on a limb and state that only 2 years from now, everybody will be saying "I wish I had bought back in late 2008."
Do you have decent job? Are your skills transferable? Does the company you work for have a good future? Are there other factors in your community that secure property value - local resources, recreational opportunities, stable health and education providers, etc?
Have you looked at residential mortgage rates lately? I remember the early 80s when the mortgage on the farmhouse we had built the year before topped out at 18.75% (some went over 20%); we could only dream about the rates under 5% that can be achieved today if you shop around. And finally when interest rates went down, inflation drove up the cost of construction and materials, which in turn pulled up the value of existing housing. This made those who already owned property quite happy, but left a lot of procrastinators standing on the side lines with nothing.
There are many reasons why people will buy a house - transferring in for a better job, beginning a new relationship, children growing, or just to have a safe place to raise a family. The number and diversity of properties available for sale in the region is outstanding. There is literally something for everyone. Sellers have been softened up and willing to negotiate. Some may even take your present home on trade making the transition even easier.
Do you have a practical need to make a move - baby coming, rents higher than a mortgage payment, closer to work? These life events continue to happen but in the last 18 months the buyers have paused. We see them in the open houses, take their phone calls and emails, but they are hesitant to show up in the signing office. Two weeks ago I saw a young couple, both University graduates with good paying jobs in the energy sector, talked out of buying their first home by well-meaning parents, who if they would admit it, took similar risks at that age (with less education) and won big. How long do you think it will be before this pent up demand will break loose? Not much longer I think.
Potential investors in residential properties should also pay attention to opportunities in this market. The return on investment has started to rise prompted by stable capital costs supported by an increasing rental rate structure. People need housing, and if they are not buying, or camping in their parents' basement, then they have to rent. How many jobs are advertised in this and other newspapers? The population is coming in to this region, not going out.
Ask those already managing local properties if their portfolio went down 15 to 20% in 45 days like those with mutual funds administered by "experts" in Toronto and New York. Not a chance. Even today, I can show you new multifamily complexes that will bring better than 7% net, plus provide the opportunity for a potential 10% increase in capital value. I have said it before, and will say it again today, the most opportune time to hunt is when no one else is in the woods!
Vern McClelland is associate broker with RE/MAX of Lloydminster. For more helpful tips on buying and selling real estate, visit www.mcclelland.ca
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