Dan Welyk Calgary Realtor® Since 1999

There Is No Substitute for Experience.

Yeah But...Dan...Calgary Real Estate Board Suggests Prices Will Continue To Drop In 2009

More Yeah But’s....
So yesterday on the media reported that Calgary is expecting the re-sale market to continue to drop in 2009 - by about 2%.
For many potential home buyer’s out there - this can concern you. I know this kind of news does scare off some people - but, let’s put this in perspective.
Currently you pay (for example purposes) $1500 per month in rent. By January 2010 you will have paid out $18000 in rental costs.
Let’s say you are considering purchasing a $350,000 home - but with the recent news you decide to wait as you expect the home prices to continue to fall. In January 2010 you decide to purchase - and yes, home prices did fall by that 2% - similar homes are now listed and selling between $340,000 and $345,000 - you saved yourself $7000 if you purchase at exactly the 2% decrease in value.
Your rent was $18000
You saved by waiting a year $7000
You are in the red by $11,000.
If you would have purchased this home in January 2009 and paid full price at $350,000 - by January 2010 it would be worth - yes $343,000 (at -2%).
However, the remaining balance on your mortgage is now $333,700 (based on an initial 5% down) and paying $1850 per month.

In January 2010 you will have $10000 worth of equity if you would have purchased in 2009.

That is a $21,000 advantage to you! Rental loss v. Equity
By showing you these figures - I hope you can see that a 2% loss is really not worth waiting to save! In the long run, it will cost you over $20,000.
Interesting hey! Certainly not in your best interest to wait and save that 2%!



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