Affordability and the Positive Influences of Purchasing a Home

Buyers Requiring Financing, Will Fuel the Market

• 
• By Nancy Smith
• Qualicum Beach REALTOR®
• Published: Aug 5th, 2021 at 4:20 am

The OCED (Organisation for Economic Co-operation and Development with 38 member countries)

According to the Financial Times, home prices are on the rise across OECD countries. Some of the most robust growth was observed in the UK, South Korea, New Zealand, Canada, and Turkey.

World wide low interest rates, plus the fact people have stayed home during this pandemic thereby increasing their savings accounts, and substatially for some due to Government relief benefits, have encouraged people to get out and hunt for a better home or their first home. However, coupled with these advantages, our Qualicum Beach market has seen an incredible number of non-financed homes sold, leaving many buyers standing on the sidelines when financing is required.

This pent up demand from first-time buyers and those requiring financing, will fuel our local market even if interest rates climb, for years to come.

Many articles have been written about the pending home price crash, but as normal history has proven, Vancouver Island is generally immune to severe price drops. Local home prices in some instances have doubled in the past few years, so a price decrease of even 25%, after five years of double digit price increases, would be insignificant in today's market. Yes, a 25% decrease would upset the latest buyers, but often the local market prices will adjust within ten years to bring prices back to previous highs.  For example: Home bought 5 years ago for $500,000 now could bring close to $1 million, suffers a decline of 25%, is still priced at $750,000, still a great return on investment, in five years.

A few buyers from the last price peak have been able to get out from under their mortgage, bank a bit of profit and have been able to re-buy in today's market. The sad news for many of these people, no one can predict the 'top'. Two years ago, people were confidently claiming a real estate bubble, only to see concurrent 23% and 30% annual price increases.

Everyone needs a place to live, and the affordability of a locked-in mortgage often surpasses those who face annual rent increases.