Buy Up In A Down Market

2009/04/25 Originally published in the Vernon Morning Star.

The decline in values can be a substantial benefit if you wish to upgrade to a bigger or better home.

The general feeling is that values are off about 10%, or 1% per month from the peak of the market in the first half of 2008. There are a few cases where I've seen even bigger price drops when the owners have had a particular need to sell.

For the most part, the higher priced properties are taking the biggest fall. Take for example a $650,000 house. Last year that same house would probably have been close to $725,000. This creates a saving to the buyer of something in the neighbourhood of a pleasing $75,000. But suppose you have to sell your $400,000 house in order to buy the bigger, newer one. As an example lets' suppose last year your house would have commanded a price of say around $440,000, so now you're down $40,000. But if you saved $75,000 on the purchase and lost $40,000 on your sale, you are still ahead a whopping $35,000. Thats' pretty attractive, especially when you compare that gain to your other investment yields lately.

Add to this the fact that you can get a five year mortgage at 3.95% and perhaps less and you have made the leap up in the caliber of house you live in and it has not hurt too much at all. $200,000 at 3.95% costs about $1,046. monthly, when amortized over 25 years. Of course your existing mortgage could also be replaced by a mortgage at the new rates for a further saving. You'll want to go over any interest penalties with your mortgage broker or banker to strategize what your best financing plan would be.

A word of caution. Please be sure to consider what this mortgage will cost you at a higher rate in five years. You'll want to be sure you will still be able to afford your lovely new home when your mortgage renews.

Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email or call 503-3755.

RE/MAX Vernon | 250.503.3755 | Toll free 1.888.503.3755 | 5603 - 27 ST | Vernon | BC | V1T 8Z5 | Canada

Market Information for Buyers

Buy Up In A Down Market