Possible Real Estate Slowdown Provides Opportunity For Home Buyers
A slowdown in real estate sales offers an opportunity for potential homebuyers to take a breather in what has been an emotionally charged market, according to Dominion Lending Centres Chief Economist Sherry Cooper.
“This is a good opportunity to save more money for a down-payment, and give markets a chance to adjust to what I think will be a slow-down in price inflation and in activity,” Cooper said in an interview. “Figure out what it would cost you, on a monthly basis, to live in the home you are about to buy and then imagine what your lifestyle is going to be, because in order to meet the rising costs of owning a home, you are most likely going to have to cut back on some of your other expenditures.”
Prices will likely continue to climb, albeit more modestly, Cooper said, as new housing starts are not keeping up with new household formations in Canada. She does not anticipate a price decline, particularly the kind of steep decline needed to make single-family homes in cities like Toronto and Vancouver affordable for average families.
“The kind of price decline you would need to make a home affordable for the average person in those cities would actually be extremely negative for the economy. That would be extremely negative for the average person, because they could lose their job. It’s partly a matter of ‘be careful what you wish for.’”
The slow-down in price inflation is a welcome change, she said. Bidding wars led to irrational decision-making, leaving purchasers vulnerable to spending more than they can afford.
“Often it becomes so emotional and irrational that it becomes very temping to go beyond your real comfort zone in terms of affordability.”
An affordable home may mean moving to a smaller community. In the Greater Toronto area, homebuyers have begun looking in cities like Mississauga and Whitby, while in Metro Vancouver, people are looking at more affordable homes in cities like Port Coquitlam and Maple Ridge.
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