4 Reasons Why You Shouldn’t Wait to Buy in A Hot Market
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As soon as the market starts to go crazy and we see record-breaking home prices and lower than low-interest rates, some of us wonder, “Is the market going to crash? Maybe I should wait for this to slow down. I don’t want to waste my money!” While it is natural to think (or hope) this way, history proves those theories wrong.
Hot markets can get hotter, and a property that once sold for $800,000 six months later is going for a million. We are four reasons why you should not wait to buy in a hot market.
1) Getting Priced Out - You were pre-approved last year for $800,000, but in May, the market started going crazy. Houses that listed at $760,000 were selling close to $800,000. You thought you would be overpaying if you went that high over the list, so you decided to wait. Now, since your job hasn’t changed and your pre-approval is still $800,000, the market appreciation has essentially priced you out of this market. Fewer homes are being listed in your price range, and the house that sold for $800,000 last year might sell for $815,000 this year.
2) The Market Catches Up - If you buy a house for $30,000 over list price and go to sell it tomorrow, you might not make any money on it. You might even lose money after closing costs, land transfers and legal fees, but that doesn’t mean you overpaid. If you are buying a house to live in for at least 3-5+ years (which is typical), the market will catch up, and you will make money once you go to sell.
3) Losing Out on Equity - While you are waiting on the market to crash, your home could have already increased its value by thousands of dollars.
4) Pay A Premium For The Right Home - If you find the right house and have to spend over asking, consider it like paying a premium now that will pay off in dividends later. If there are still improvements you can make to increase the value even further, you are in a great position.
Even in hot markets, it is not good to wait. If you have the funds, you need to think smart about your home-buying decisions. And you need to work with a real estate agent you trust to guide you through this challenging market. If you need any more help making the first step to buying your dream home, please contact us.
At Knowledge Broker, our goal is to create an open-source of information for all our clients. At the end of the day, they get exactly what they want and what they need. If you know someone who could use our help or services, please give them our details using the contact information below.
JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
249 Avenue Road • Newmarket, ON L3Y 1N8