Buy Now or Wait for House Prices to Fall

The most common question revolving in the minds of Canadians is whether to buy now or wait for house prices to fall. If home-buyers are considering buying a new home in the current market conditions, they should keep the rising interest rates and the house prices in mind. If they wait, then they must consider by how much will the price fall or when the house prices will fall.

Although the real estate values are at an all-time high in most parts of the country, it is important to note that the calls for a housing correction, crash, or bubble have been going on for nearly 10 years, has and they have not materialized yet. Economists have posited that buyers should not wait for house values to drop or to try and predict when the drop would occur because attempting to time the market is dangerous. If they have the financial stability to make the purchase in the current market scenario, they should avail the opportunity at their earliest convenience.

Analysts have suggested home-buyers need to come up with a strategy before finalizing a purchase on a new home. One of the strategies recommended is that home-buyers should purchase their new property with the intent of holding on to it for 7 years or more. This is because if the home being purchased is located in a high value area, the value of said area would increase significantly over the course of the next 7 years.

Considering the history of the real estate market, almost in every scenario, house prices have increased and have never decreased. Even after breaking all the records of the past year, the current housing market is still increasing at a rapid pace. There are a significant number of unfulfilled demands, and these will continue to fuel tremendous activity across the country. Economists have predicted that the house prices will continue to climb, although the pace will be much slower.

Moreover, it has been estimated that most of the supply and cooling effect on the market will take place in the second half this year. This provides an opportunity for new home buyers to purchase a home for themselves consequently at a higher price. Subsequently, comparing the house price hikes in the future, 2022’s price increase would be comparatively cheaper than 2-years from now. Royal Bank of Canada has estimated that Canada’s benchmark price will increase to 6% in 2022 and the momentum will be slower in some markets in 2023 in order to achieve a better balance in supply and demand.

So, considering the current situation and the factors that will have an impact on the housing market in the future, first-time home-buyers should aim to purchase a house this year. It is also recommended that they should apply for a fixed-rate mortgage because this will ensure that they are protected from future rate hikes.