Buying in 2024…a Q&A!

By Kathy Schmidt, Broker/Owner, Schmidt Realty Group Inc.

Spring is often the time that buyers like to start their search. It makes sense! Moving in the warmer months is easier, and spring is a time that just “feels right” for a new beginning. With that in mind, it seemed a good time to answer 5 questions we’re being asked by buyers right now!

1. Should I buy now?
   The simple answer to that simple question is… it depends! While it’s important to understand what’s happening in the market and the economy overall, what’s most important is what’s happening in your world!  Are you at a point in life where you want to put down roots? Are you at a change point where your current living arrangements are no longer serving you? Don’t buy just because everyone else is. Following the crowd could lead you to make a costly mistake. For instance, if you’re living in Edmonton to study at the U of A and you know you’ll almost certainly be moving to Calgary next year for further study, it probably doesn’t make sense to buy… unless you plan on keeping your Edmonton property and renting it out while you’re living elsewhere. Selling quickly after you buy can sometimes turn a profit, but unless you’re a seasoned real estate investor with deep pockets, I’d stay away from the idea of making a quick buck by flipping property. If you plan to stay in Edmonton for at least a few years, and you have a good idea of where you’d like to live and the lifestyle you’d prefer, then exploring buying now is probably smart.With the high level of people moving to Edmonton it’s likely that prices will rise, so waiting might prove to be costly.  Sitting down with a REALTOR® you trust and considering your particular situation in conjunction with current market conditions will help you decide if now is the right time for you to make a purchase.
2. What’s going to happen with interest rates?
   Oh, if only I had a crystal ball!  Looking to the experts, it sounds likely that variable rates could begin to drop by June.  There’s also some talk of fixed rates rising!  Mortgage interest rates are tied to the bond market, so unless you’re a financial expert you’ll want to speak with someone really knowledgeable. I can refer you to some excellent lenders so you can find someone who’s the right fit for you, and have an in-depth conversation about how rates might impact your potential purchase.

3. Should I buy a house or a condo?
   That’s a bit like asking me who you should date lol! It all depends on how you like to spend your time, what’s most important to you, what part of the city you want to live in, and also your budget. In some cases, buying a condo can be much more affordable, and often the entry level price point is lower.  There are condos available in good neighborhoods under $300,000 where a single family home might cost you closer to $500,000.While the initial price of a condo can be significantly less, you’ll need to take into account the cost of condo fees as well. This often includes your utilities and there’s an allowance for long-term maintenance of the build as well which is put into a reserve fund for spending as needed.  Whether you own a house or a condo, you’ll need to save up for repairs and maintenance… in a house you’ll want to do that in a savings account, and in a condo you’ll do that through monthly contributions to a reserve fund. Sometimes homeowners find they need to use a line of credit to cover large unexpected repairs, and similarly condo associations sometimes need to levy a special assessment on all the owners to pay for work needed that exceeds the amount saved up in the reserve fund.Besides your budget, it’s so important to consider your lifestyle!  Would you look forward to digging in the garden and mowing the lawn? If so, a house is probably a great choice for you? If you’d rather sip a coffee on a balcony and you don’t have any need for a yard, you might want to consider an apartment condo.  Purchasing a half-duplex is a great option that gives you the best of both worlds. You’ll usually have a private yard, but it will be smaller so less work, and the price point can be less than purchasing a single family home, depending on the age and size of the duplex.  There are so many things to consider! Sitting down with a real estate expert is the best way to make sure you don’t miss any options that might be really great for you!
4. Should I wait to save a higher down payment to avoid mortgage insurance costs?
   This is a great question, and a very important one. If you have a higher down payment (commonly 20%) you may be able to avoid having your mortgage insured by CMHC or Genworth. The cost of insuring a mortgage is added to the loan and you pay it off over the life of the mortgage, so there’s not an initial cash outlay, but it will add to your payments and the total cost of borrowing over the long term. However, if prices are rising quickly, you might be better off to buy and pay the fee to get into the market. And don’t discount the value of owning your home and starting to build community for your family now… waiting to save could prevent you from putting down roots and getting your kids settled in the preferred school, so it might be smarter to go ahead and buy.  Also, you might be surprised to learn that lenders often require buyers who have more than a 20% down payment to still have their mortgage insured. Self-employed individuals are one example.  Talking to a mortgage expert well in advance of your purchase is the best way to make a plan that’s right for you.
5. How long will it take me to find a home?
   There’s a saying that Preparation + Opportunity = Success. The better prepared you are to take advantage of the opportunities that come up in the market, the more successful you’ll be! Preparation for purchasing starts with gathering your team… typically your lender and your REALTOR® are first, followed by your home inspector, condo review advisor, and your lawyer.  Meeting with a lender for a proper pre-qualification and creating a solid plan with your REALTOR® are the best ways to set yourself up for a successful search. Once you’ve got that foundation laid, then it’s a matter of being available to view homes quickly when your agent finds an opportunity for you, and being knowledgeable enough about the market to proceed with a confident enough offer to beat the competition if you find yourself in a bidding war.  You might be surprised how quickly the process can go!  We’ve had clients start the process and move into their new home within a month. For other clients, it can take a number of months to find the right match. Typically if you start today it’s reasonable to think that you’ll make a successful purchase in the next 30 days, unless you’re looking for something really unique.A good agent can help you understand how fast the pace is in the price range/location/property type that you’re looking in, and how prepared you need to be for competition from other buyers.  This will set you up to recognize the value of a home and move quickly and strategically if it’s the right one for you.  Understanding the market and having a strong partnership with your agent is be your secret weapon to finding and successfully purchaseing a home you love!

If any of this strikes a chord with you and you’d like to start a conversation about your move, please reach out.  Our team of real estate advisors at Schmidt Realty Group are experts in helping our clients get market-wise quickly so you know good value when you see it, and can help you navigate the tricky ins and outs of everything from negotiating the deal to getting the sold sign up to the exciting day when you get the keys to your new home. Please feel free to reach out any time. There’s nothing we like better than guiding someone safely through the market maze to happy home ownership!