Thursday, April 14, 2016
Real Estate News
Selling Your Home?
Knowing your long and short-term goals in housing market
Sarah Pederson, Envision CU
ast week the Chilliwack and District Real Estate Board reported that March was its busiest in history with 494 home sales—the highest number of sales ever reported in one month. The month was also marked by a 21 per cent increase in the median sales price for the area, up to $400,000 compared to $330,150 in March 2015.
So what do these record-breaking increases mean to the average Chilliwack and Hope residents? Is now the perfect time to sell, take out the additional equity to go on a dream vacation or purchase a rental property, or stay put in case even higher prices are on the horizon? According to Robby Toor, personal account manager at Envision Financial, a division of First West Credit Union, it all depends on your goals—both long and short-term.
“Real estate is a hot topic right now, and I always advise my members to make sure they don’t get caught up in the hype,” cautions Toor. “Before making any decisions, I would suggest sitting down with a financial professional, reviewing your financial plan, and seeing if the current market presents any opportunities that fit within your overall plan.”
“For example, I recently had an older couple come in who were looking to downsize and split their remaining equity between their children,” says Toor. “For these members, it made sense to take advantage of the recent increase they’d seen in their home equity as it fit with their long-term goal of helping their children.”
However, Toor is quick to caution that people looking to cash in on the recent “windfall” think long and hard before selling.
“While there has been a 21 per cent increase in median sale prices in the area over the past year, people have to remember that all the other homes around them have increased as well,” says Toor. “Unless you’re looking to move to an area where homes are less expensive or downsize it may not make sense to sell.
“I’ve also had conversations with people who are looking to sell and rent until the market cools off. But the risk you run is if house prices continue to increase you could eventually be priced out of the market. I would also advise people to avoid taking equity out of their home for short-term purchases such as cars or vacations. It’s all relative and should the market reverse, you don’t want to be stuck owing additional money on a home that has decreased in value or even owing more than your home is worth.”
Looking to the future, Toor reminds local residents that this type of record-breaking market activity is unusual and unpredictable and that other factors are at play.
“We’ve never seen a market quite like this before,” says Toor. “History has shown us that there will eventually be a peak, but we have no idea of knowing when that will happen. People need to remember that interest rates are at an all-time low. When they eventually increase, this will likely have an impact on the market and on consumers’ ability to repay their mortgage. What’s more, foreign investment is a major factor in the record-breaking gains we have been seeing.”
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