There is a lot of speculation around what will happen with real estate prices with the fall of oil prices and the subsequent threat of lost jobs on a large scale in Alberta. Analysts and forecasters can't agree on the outcome. After all they predicted that interest rates would rise in the first part of 2015. They were wrong, the Bank of Canada lowered interest rates. Some are saying this was a vain attempt to keep buoy up the real estate market and encourage people sitting on the fence about purchasing to make their decision to buy. Others say it was to stall of a market crash.

Real Estate is one of the most stable investments but it is not without it's ups and downs. Like any other investment, real estate rises and falls and home prices increase and decrease based on many economic factors. One argument is that it doesn't matter if interest rates are low, people can't buy if they do not have a means to repay the mortgage. Then there is the question of what happens if there is a job loss which prevents the buyer from meeting his financial demands?

These scenario's happen all the time, regardless of what the market does, there is always a chance of a job loss or interest rates and prices fluctuating. The end result is that everyone needs to live somewhere so whether you're paying a mortgage or rent, there will always be a demand for housing from your income.

The best decision is to ensure you are not purchasing more house than you can afford. Keep your goals realistic. If you don't really need the 5,000 sq ft mansion with a three car garage then it might be best to not purchase it. Remember the house you buy is going to be your home. It should be a place that you have time to spend in, otherwise you are working to pay for a house you see little of. That has always been the best advice, regardless of what interest rates are. It's great to have a house that you can be proud of, but it's not great to have a house and being house poor.

Try to remember that there has to be a quality of life left after the mortgage payments, car payments and basic living expenses are met. Buying more than you can realistically afford is what gets people in trouble when the crunch comes. The absolute best advice is plan your purchase not on what the bank says you can afford, but on what your family can afford if it were reduced to one income. In the course of 30 years, which most mortgages are amortized over, there is a good chance that at some point one of the parties will be unable to work for one reason or another. This needs to be part of the budget planning process when buying a house.

Source: http://www.edmontonjournal.com/panic+over+Edmonton+housing+market/10887291/story.html

By Scott Bollinger, Edmonton Journal March 13, 2015

 

EDMONTON - If you hold your head just right and squint, you can visualize analysts in Toronto reacting with barely-disguised glee to another day of gloomy headlines about Alberta’s housing market.

The rest of the country seems to revel, just a tiny bit, when Alberta’s the source of troubling economic news instead of the usual regular torrents of good. And we’ve seen our share of trouble lately, with story after story proclaiming grim impending death for Alberta’s housing market.

It’s true that the data has shifted from the heady days of the summer of 2014, when Edmonton was setting records for residential house prices. In the first two months of 2015, listings are indeed way up and sales are way down.

But I think our central Canadian friends are buying a little too eagerly into the ‘everyone panic!’ narrative that’s fuelling those headlines.

For one, prices in Edmonton haven’t dropped alongside sales. They’re steady year-over-year, which suggests that Albertans haven’t yet succumbed to the impulse to panic. We’re an optimistic bunch. We’re used to economic cycles, and precipitous drops in the price of our major commodity — oil. This isn’t our first rodeo.

Also, a drop in sales numbers in February, when the sample size is already relatively small, is one thing. Drops in sales numbers between April and June, typically the busiest time in any real estate market, would be quite another.

Those analysts would do well to wait for the snow to melt before they set those predictions in stone. Put simply, people would rather buy and move in the spring than the winter. It’s just that much less annoying to pack up one’s life when it’s sunny and warm(ish).

Read More Source: http://www.edmontonjournal.com/panic+over+Edmonton+housing+market/10887291/story.html