Now might not be the time to buy a home. It might be time to sit tight. However, if you are planning to sell your home this year we suggest you sell as fast as you can right now.
Why the stark contrast between the buy and the sell?
If you are paying attention to the news you probably know a few things:
1) The feds dropped the interest rates in the USA
2) Trump wants the rates lowered even more
3) The trade war between China and the USA just came to a head with the Chinese government devaluing their yuan – this sent the stock market into a spiral (globally)
4) Which leads to the feds suggesting they need to drop the rates again in the USA
5) When that happens – Canada typically follows suit
6) We also have the pending Huawei trial occurring in Canada. Farmers are feeling the affect of this decision:
“The hardship is mounting for Canadian farmers hurt by China’s decision to stop buying certain agricultural exports from Canada in the wake of Ottawa’s arrest of a top Chinese tech executive.
“Since the end of December we have not sold a single vessel – a shipload of soybeans – to China,” Ron Davidson, executive director at Soy Canada, said.” Read More about that, here.
We are in a recession.
People do not want to say it on the news. It’s not being advertised – but if you look at all the facts. We are in a global recession with countries like Italy, Australia, the United States and Canada feeling the effects.
So why is it time to sit tight ? Isn’t this the perfect time to buy a home? Yes. And no.
1) The Markets (Real Estate Not Stock)
It is currently a buyers market – we all know that. However, with lower interest rates on the horizon and a bigger trade war forging on with Donald Trump and the rest of the world, there may be more inventory in the coming months.
There are currently over 1900 homes listed on the MLS for Saskatoon and surrounding area. With more layoffs on the horizon for Saskatchewan that might suggest more homes up for sale.
“Saskatchewan’s small business owners are planning to lay off workers at almost twice the rate they count on hiring new employees, according to a survey suggesting a pessimistic business mood” The Leader Post
2) Interest Rates
Banks are currently loaning money at around 1.75% in Canada, and that is great. But, if rates drop by 25 basis points or 50 basis points you will be saving yourself a lot of money on the interest in your home.
“Inflation is still below 2% the purpose of the interest decrease is to get inflation back on track“ Financial Post
The Bank of Canada needs to have an outlook for the global economy. That’s what the fed is responding to. The Bank of Canada does not need to respond immediately to interest rate cuts – but if the US is worried about the economy and feels the need to drop the rates again, Canada needs to follow suit.
3) The Economy
The Saskatchewan economy is not exactly booming right now. No economies are. With this in mind, and keeping in mind the above information – it is a great idea to sit and wait before you buy your next home.
“After posting GDP gains of 2.2% in 2017 and 1.5% in 2018, midway through 2019, with a few exceptions, most of Saskatchewan’s key economic indicators are signalling slower growth in 2019.” Canada Construct
Right now is still a great time to buy a house… But you might get a better deal and save more money if you wait. There is a lot of inventory in the market. Interest rates are low and could be lowered. And if you are ready to be a homeowner and you have found your dream home, it’s a great time to get into the market.
As always, if you need help buying or selling your home, please let us know.
Gregg Bamford and Ryan Bamford