Maybe… but maybe not!
Anytime someone says “always” it makes me nervous lol! It’s not always best to buy right away – especially if you might be moving for work in a few months for instance! But it’s not always better to sit tight and save either. First of all let me say I’m not a financial planner J I’m also not a mortgage broker. I’m a Realtor and so of course I believe in real estate as a valuable investment for Canadian families. Be a smart consumer. Gather the facts, talk to your friends and family, and make an informed choice. Meeting with a financial advisor and a Realtor you know and trust is a smart way to get started as well. But don’t just take my word for it. Here’s what Jason Heath, certified financial planner with Objective Financial Partners Inc has to say:
“Your money grows tax free (in your primary residence). Even in your RRSP, there are forced withdrawals and it’s fully taxable [when taken out].”
Home prices are on the rise in Alberta. Prices are on the rise, with a serious impact on affordability especially for people trying to get into the market for the first time. If you’re a first time buyer in Alberta, there are a number of ways to approach getting into your first home:
- Live as cheaply as you can and save save save! Live at home, and persuade your parents to let you do so rent-free if you can! If they can see you’re actually saving almost everything you earn they might just go for it! Say no to tropical vacations for a few years and instead enjoy thinking of enjoying your very own patio or back yard soon J
- Consider buying a property with a friend. There are safe ways to do that that involve a Purchasing Partners Agreement. Your lawyer can draft this up for you so that you agree with your friend, in writing and in advance, what will happen if one of you wants to sell before the other, as well as how the property will be used while you own it.
- Talk to your parents or other family members about buying a property together. They may be looking for a good investment and if you’re willing to live in the basement suite for a few years while the main floor tenant pays today’s high rent, in a few years you should all have earned a good amount of equity. Then you can either sell it and share the gains, or perhaps you can get a mortgage then and buy the other party out. Either way you’ll have been in the market instead of sitting on the sidelines.
I’m a big fan of options 2 and 3. Option 1 sounds very logical and safe on paper, but is it really? Take a look at this example:
- Imagine that property values rise conservatively 5% in the next 12 months. This isn’t unreasonable as the average single family home rose 5.8% from June/13 to Jun/14 and the median sales price actually rose 8.5%! Click here to view our Market Report for Edmonton real estate results for Jan-Jun 2014
- Looking at a $300,000 property, this means that in 12 months it would have risen by $15,000. This means you even if you had saved $1,250 a month for the entire year, you would have only kept up with prices!
- If you’d found a way to come up with the down payment earlier (such as buying with a friend or with your parents) then the gain in the value of the property would be yours! In other words, you’d be gaining financially vs scrambling just to keep up!
Whatever you decide to do, what matters most is that you’re well informed. You can call on our team at Schmidt anytime for friendly helpful information. A casual conversation over coffee might be all you need to help you figure out what makes the most sense for your unique situation J
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Kathy SchmidtOriginal Source