Edmonton Real Estate Trends
Edmonton Real Estate Trends
It seems everyone is watching the real estate market these days, and for some, with a nervous eye. The big question foremost in everyone's mind seems to be what is going to happen with the Oil prices and how is that going to affect the real estate market. It's a natural reaction when the local economy has become so tightly dependent on a single industry, and that industry has been driving the sale of real estate.
It is normal, however for Real Estate to fluctuate from year to year. It's true that a lot depends on the state of employment, but in the end people have to live somewhere and although there may be a slight adjustment in real estate prices, it doesn't affect anyone who is planning on buying and living in that house for the long term. The only time a fluctuation in price may affect you is if you're planning on selling soon.
Real Estate is subject to the same factors that any investment market is, whether it be stocks and bonds, currencies or any investment. Markets fluctuate constantly, but that should not make anyone too nervous. For instance, lets assume you had bought your house in 1979 when interest rates were hovering at approximately 7% and had been stable for many years. The only factor anyone worried about was making sure they didn't buy more house than they could afford to pay for. In the early 80's when interest suddenly shot up to 17% and higher, and Canada had just recently changed it's mortgage laws to force a mortgage renewal every 5 years, if you were in a position where you had to refinance or sell during that period, your monthly payments increased considerably. Realizing this might cause a problem however, caused the banks and lenders to introduce a 6 month mortgage so every 6 months, if you were wise, you would renew your mortgage and enjoy the lower rates as they slowly dropped back to normal, then lock in the rate when it became stable again. It did cause some hardships for everyone for a short period, and caused some to lose their homes when they couldn't make the higher payments. But, for the most part, it wasn't a huge problem and what it did do is force the Canadian government to change the way banks and lenders in Canada were regulated.
Today the mortgage rates are extremely low, which makes for a very positive buying environment. The only detriment is the increase in prices. It's of no use looking at how home prices for the average home in Edmonton in 1980 was in the range of $119,000 and that same home today would be priced at three times that amount or more. When you're looking at 30 years ago, you need to also consider the incomes of the average family, the interest rates and other economic factors.
Regardless of what happens in the Real Estate Market, real estate is always one of the best investments because you hold Real property. There is a limited supply of land, which means land will always hold value.
Lets assume you wait to purchase because you're anticipating home prices will drop, and lets say they do drop by even as much as 20% which was the case in Toronto last year. The truth is that interest rates will not stay as low as they are now forever. When real estate prices drop, it is very likely that interest rates will increase.So that same house that was $400,000 at 2.96% interest and today is $320,000 at 6% interest is still going to cost you more in monthly payments so.
The most important thing to consider when you're purchasing real estate, whether it's for your own personal residence or an investment, is to be sure you're never buying more house than you can comfortably afford. It is no accomplishment to have your dream home and not be able to afford to live. Being house poor is not a good choice.
No one can tell you what the market is going to do. Even the best economists get it wrong. Unless you have a crystal ball and are a psychic, there is no way of knowing. Even Psychics are wrong more then they are right. Just purchase what you can afford and still live a comfortable life style, and you'll be fine regardless what the market does.