2011: Here We Come

by Darrin DeRoches December 30, 2010 - January 5, 2011

Let’s take out our crystal balls and look into 2011 – the new decade – and see what lies ahead for the real estate market. Recently, a   senior Scotiabank economist, Adrienne Warren, stated, “We are neither overtly optimistic nor pessimistic regarding the outlook for 2011.”  This is about as wishy–washy as it gets, but Warren later said that “The bigger risk likely awaits 2012 when more significant interest rate increases, combined with record high home prices, will notably strain affordability.”  So what does it all mean?     Everyone is predicting that the Bank of Canada will maintain the prime rate at the current level well into next year. The rate currently sits at 1 per cent.  Even though they are going to  start raising the rate, you can do something now to protect yourself. Mortgage rates have been so low for so long we are just used to it.  Wake up! They will rise in the latter part of the year, so take advantage of the low rates while you can.  Look to see if you can break your mortgage and take advantage of the lower rates now while the banks are ready and willing to lend.  When the rates start to rise, they will start to tighten up their lending practices. Do it before it’s too late.     The next part of their predictions is that housing prices will continue to rise.  This is good if you are looking to sell, and maybe a little concerning if you are looking to buy.  For those people who are waiting for the market to crash, you will be waiting a long time. The housing market in our area has avoided the big bubble bursts and crashes in the past three years. The low interest rates and a stable economy will spur on first–time buyers and those looking to upgrade their homes. So if you presently live in a starter home, you really should be considering moving on up the property ladder.  You will be able to sell your home for top dollar, and with the low mortgage rates, you can afford a new, bigger house.      You may be amazed at how fast your starter home will sell, especially if it is in a good area on the Mountain.  If you have a 5 per cent or higher mortgage on your present home and you’re looking to upgrade to a larger home and get a 2 to 3 per cent mortgage, the difference in the monthly costs may not be that big of a change.  If you purchased a starter home in the last five years, you probably have made anywhere from $25,000 to $50,000.  This added to your original down payment will not only cover the cost of selling your home, it will be a significant downpayment on a new home.  This plus the lower mortgage rates makes those who bought in 2005/2006 prime candidates for making the move on up! If your mortgage is coming due, sign an open six month mortgage and start considering your options!  V Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.