The Perfect Storm

The Perfect Storm

In a few years, you will look back at this time period and say to yourself “why did I not purchase a new home back then”?
Today in Calgary, you could not ask for a better time to purchase your first home or sell the one you are in now and move up to a larger one. As the title suggests, we have the makings of the “Perfect Storm” in the Real Estate world here in Calgary.

Here are the three Key Aspects that make-up this Perfect Storm:

1- Historically low interest rates
2- A wide selection of houses and condos on the market to choose from
3- Two and a half year old prices

Yes, except for a few over priced turkeys, the market in Calgary has leveled off and for the average buyer the opportunity to get tremendous value in your home purchase will not get better than it is today!

Here is a quick observation for you to ponder:

If you purchased a single family home in April 2008, avg price at that time, $475,513 at a 5 year rate of 5.386%, with 5% down, add CMHC fees and 35 year amortization, your monthly payment would be $2,449.60

Now buy that same house today, at an avg price of $420,354, 5 year rate of 3.95%, with 5% down, add CMHC fees, 35 year amortization and your monthly payment would be $1,803.62

That is a savings of $645.98 per month or a 26.37% savings!!!($7,751.76 per year)

Question- What if I have to sell, in order to move up?

Well, it works even better in your favour to do just that in today’s market.

Here’s why:

Lets say you sell your current home for $300,000 today and move up to a $450,000 home that is bigger, more bedrooms, a garage, etc.

Versus

Four years from now, when prices are up 5%, and if prices have gone up, then you can take for granted that the interest rates have also gone up. Without adjusting for the increase costs of the future interest rate and you only focused on the 5% price increase, here are the new numbers:

Your current home in 4 years, $300,000 x 5% = $315,000
If you move up now to the house you need and then look at it in 4 years you get $450,000 x 5% = $472,500

A difference of $7,500 (and remember this is without the interest change calculated in).

Most banks will waive or discount your payout penalty or blend with the new mortgage rate for your new home.

When opportunity comes knocking, answer the door!

I encourage you to give us a call at 1-403-861-2838 and we can help you make the right choice and answer any questions you may have.

Ken Eddy
Glenn Herring
RE/MAX Real Estate Central
Calgary, AB.