Should I buy now or wait?
I am sometimes asked if now is a good time to buy or if it is better to wait a year in case, for example, house prices or interest rates fall.
When looking at house prices in Ottawa, the average sale price of a residential-class property sold in January in the Ottawa area was $427,487, an increase of 8.8 per cent over January 2017.
Therefore, if you wanted to wait one year to purchase, the house you are looking for could be 8.8% higher next year which, based on the average January price in Canada, would mean a price of over $36,600 more.
When looking at rates, if you go back one year with fixed interest rates, a 5 year fixed rate was approximately 0.65% lower than it is today. Based on the average home price in Ottawa in January, with 5% down and a 5 year fixed rate, the increase in rates would cost you over $12,400 more in interest over the term, if the rate increase trend continued.
The total of the price and interest extra cost for the one year difference is approximately $49,000.
In addition to this, mortgage rules are frequently changing and one year ago there was not the stress test in place for conventional buyers, Ontario’s 16 new housing rules had not come into effect, and so on. We will have to see if this trend continues.
It is important to purchase when the timing is right for you, however waiting for prices and rates to drop may not be the best strategy in today’s market.
Source: Ottawa Mortgage Man