Dan Welyk Realtor®  Since 1999

There Is No Substitute for Experience.

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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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