Is Buying A Home Right Now A Mistake?
When you see all those âfor saleâ signs pop up in your neighborhood â and then see them change to âunder contractâ shortly afterward â itâs easy to feel like youâre missing out if youâre not buying a home this summer. So, you run the numbers, spend nights scrolling through listings, and start to imagine your new life in your dream home.
Thereâs just one thing: you may not be ready to buy a home right now. While most real estate agents point to a hot market (and still low-interest rates) as a good reason to start making offers, there are more factors that go into this big life decision. The real estate agents that automatically tell you that NOW is the right time to buy a home canât know that without knowing the specifics of your situation.
Before going down a long and stressful journey, let's go through some scenarios that might help you decide if it's the right or the wrong time for you to buy a home
You have to get very creative to afford a down payment.
Letâs face it: Saving enough for a 20% down payment on a home can be a daunting challenge. While many loans allow for lower down payments, these also often come with âhidden expensesâ that add to your monthly mortgage costs such as Canada Morgage and Housing Corporation (CMHC) or higher interest rates. While every homeowner-to-be anticipates making sacrifices to afford their home, you donât want to be in a position where affording your monthly mortgage payment requires serious hardship.
In addition, your monthly mortgage payment isnât the only expensive line item in your budget: youâll need to be able to afford maintenance, furniture, and emergency repairs big and small.
Your friends are all buying homes and you feel left out.
This is a big one. When everyone else is buying new places, itâs easy to fall down the spiral of judging yourself because youâre not doing the same. However, the grass may seem greener on the other side of that âsoldâ sign. Your friends may be showing off their new digs, but not telling you how theyâve had to put off going on vacation for at least a decade in order to afford it. Or, they may be able to afford it, but theyâre not the ones who will be paying your mortgage. Donât fall for peer pressure if your current place fits your needs right now.
Everyone keeps telling you youâre âthrowing money awayâ on rent.
Itâs true that you do build equity after you buy a home, but it can take years before you see an effect on your net worth. If you need to move (for work, a relationship, family, or because the home doesnât suit your needs) before you have positive equity in your home, then you wonât enjoy the boost in net worth. If you value flexibility more at this stage in your life, then renting makes more sense. You can build your net worth in other ways too, like contributing to a Tax-Free Savings Account (TFSA), RRSP, or other investments.
You have no idea what your current home is worth.
Sometimes the market is just not in your favor right now, and there might be little changes you can make that can increase the value of the home you're currently in. Get a free and accurate home value report from one of our team members if you're unsure or haven't checked your home's value in a while.
Youâre focused on the style of the home rather than the lifestyle of homeownership.
Youâve passed by a certain home dozens of times and find yourself looking through the listing photos more often than you look at photos of your family and friends. Youâve mentally re-decorated and decided exactly where youâll put your sofa. Fun, right? Now imagine waking up at 7 AM on a Saturday to mow the lawn, fix the toilet in the master bathroom, and find out whatâs making that creaking noise in the attic. Or, having to cancel your weekend get-together with friends because your water heater decided to stop working and a repair person canât get there until later in the week. Not as fun. Home maintenance is an ongoing project filled with unglamorous tasks that you may not be ready for just yet.
Your dream home will significantly add to your commute.
While you may not think youâll mind that extra hour on the road each way in order to have a garage to call your own, itâs likely youâll feel differently after the novelty of the new home wears off. Though there are always trade-offs with homeownership, one involving location requires a huge life change â so it isnât one to take lightly or rush into. This is also true when it comes to moving to a drastically different kind of area or any time you have to also consider a change of school systems.
The very idea of moving makes you panic.
Even if you can afford the down payment, have leftover money for emergencies, are okay with the lifestyle change of homeownership, and have found a new home that offers way more than your current place, you still may not be emotionally ready to buy a home. Something to consider: if youâre feeling anxious or overwhelmed about the idea, or itâs causing conflict with your significant other, a timeout may be needed. Pick a date in the future to revisit the idea of buying a home, then see how you feel. If your gut says youâre ready, get in touch with a real estate agent who will find you a home thatâll make you excited to make the big move.