Thinking about buying a home in 2020? What are some things you need to consider? In this episode, we discuss what are the key factors to look if you are planning to buy a home in 2020. We explore if you should time the market and what non-monetary reasons to consider.
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What we discussed:
Hi everyone. I'm Karl. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips from home buying experts.
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So today I'm joined by local realtor, Brad McCallum with Remax First. And the topic we're going to cover is:
Should I buy a home in 2020?
So Brad, if I haven't bought a home yet and I'm thinking about buying a home in 2020, is it a good time to buy in 2020?
Listen, you should never ask a realtor this because it's always a good time to buy.
Karl Yeh: Of course.
No, I'm just kidding. I personally, I actually do think that it is going to be a good opportunity for people to enter the market.
The trepidation, I think a lot [00:01:00] of people have, especially in our local market, is that, at the beginning of the year there was forecasts that housing was probably going to drop in price.
And obviously if you're a buyer, you don't want to buy something today if you're worried that it might actually drop in price a year from now.
So what we've actually seen though in our local market is there's been a real stabilization.
So over the last six or seven months, we've seen a decrease in inventory.
We've seen [00:01:30] not necessarily an increase in sales, but a lot more balance returning to the market.
There's about three and a half to four months supply in some of the different sectors, and that's a fairly balanced market.
The challenge that we face right now is just the general mood, right?
Should you try to time the market when buying a home?
If you watch the news too much, you can start to realize that there's all these events you have no control over [00:02:00].
But if your own life, if you're getting married or your family's growing or it's time for you to buy that first investment property, let your own situation be the guide on whether or not it's the right time to buy or not. Don't try to time the market.
Because I think unless you live in Vancouver or Toronto, which the markets are very, very different.
I also think that let's say the prices do come down a little bit. Right? It's not like you're going to sell your home within three months of buying.
So I think it is an [00:02:30] investment at least two, three, five, 10 years. Right? So it doesn't make sense to just follow that fluctuation.
Absolutely. So here's the thing. There's an analogy of no one wants to catch a falling knife, right? You want it to hit the floor, pick it up safely.
And so that's the idea with falling home prices that buyers get a little bit nervous if they see some drop.
But the reality is is home prices every year in steady markets and in up markets, there is fluctuation [00:03:00] of always 2 or 3%.
They might start the year saying, "Oh, you know there's going to be a 4% appreciation in price", and we see 1 or we see 7%. So no one has a crystal ball. No one knows what the next year is going to be.
And I think it's, and once again, it goes back to your own personal situation.
If you're making an investment and you're trying to time the market and sell it in a year, it's almost never a good decision to take that approach.
But if your window is three to five [00:03:30] years, which is sort of a common time for someone to buy their first home or you know, before they move to their next home, then you're probably going to be fine.
I'm actually quite bullish on Calgary. I'm bullish on the housing market. If you give yourself enough time in the market. It's the same thing like investments.
They say invest a little bit every month for the longterm and 30 40 years from now you're going to be so glad you did.
I'm 41 years old. I know friends [00:04:00] who didn't buy their homes and it never got cheaper.
Karl Yeh: I never thought that, yeah.
Brad McCallum: It just never did.
Yeah. Well you know it's funny because one of the questions I was going to ask you is do you think prices will go down in 2020?
But I don't think it really matters. Right?
Because the market fluctuates and like you said, you don't know what are the situations that'll come in 2020.
Non monetary reasons for buying a home
I mean in our local market, there's so many different factors that could be [00:04:30] down a percent that could be up a percent.
Or it could be up as many as five or six percent. There is so many things.
One thing I know is that if there's a fluctuation of just a little bit, it doesn't matter if your horizon is a five year horizon. It doesn't matter.
And the more important question that you should be asking, because most of us, it's like one of those primary goals is to have a home and if that's something that you [00:05:00] want and something you need for your family, there's a whole bunch of non-monetary reasons to have that sense of permanence, to be able to offer that to your family.
I mean there's so much more value that you're going to get from it than just the return when you sell your home even five years from now.
Well, it's interesting because I know we've gotten comments in the past from videos saying, hey, when you did a video on, should I buy a home in 2019?, and we've got some comments saying, well you didn't answer the question.
But I'm like, I think the question has to come [00:05:30] back to you is look at your situation. I
s that a good time for maybe you to buy in 2019 or 2020, right? Has your situation changed? Is your family growing? Is your family going getting smaller?
Brad McCallum: Do you need changing?
Do you need to move? Yes. Have you gotten a new job that you can't possibly commute or you'd like a very closer commute?
I think that would probably be the answer is ask yourself. Is it the right time for you to buy?
Absolutely. Housing is one of those basic needs that people have.
Like we [00:06:00] need a roof over our head and we are inside and, especially in our climate, we're inside our homes for six months out of the year.
There is a real quality of life, a tick that you get when you're in a space that you enjoy.
Karl Yeh: Perfect. So do you have anything else to add in terms of buying a home in 2020?
Yeah, I mean I would just say don't follow the headlines too closely.
If you follow those headlines, you're going to believe at any point in time that the entire world is falling apart and that there's never a good [00:06:30] time to buy a home.
And that's the thing is, and I've been there too. I can understand that. What I would say though is that over the longterm... I read a statistic once, I know it was for America, so I don't know how it applies to Canada, but a 65 year old citizen of the United States who is a homeowner, his average worth is about $380,000.
A 65 year old citizen of the United States who's a renter, his average worth is about $7,500. [00:07:00]
So even if you do nothing else in your life, if you don't save for the future, you don't put away for RRSPs, if you just make that monthly payment on your mortgage, you are going to be gifted with a safety blanket 25 years from now when you've paid off your house.
It's one of the simplest paths for the everyday person to build wealth for their family and for themselves and their retirement.
So you actually touched on something. If you want to know more about renting versus owning, [00:07:30] check out our video here in the description below.
Question of the day
Karl Yeh: So the question of the day I have for you is:
Are you planning to buy a home in 2020 why or why not?
Let us know in the comments section below.
If you want to know more about buying or building a home, check up this video here as well as other home buying videos and our playlist here. And don't forget to subscribe and I'll catch you in our next video.
About Brad McCallum:
Brad McCallum is a local Realtor with RE/MAX First in Calgary, Alberta. He's made his name for himself by incorporating his passion for videography and marketing, along with his wife and family into his real estate business. This fresh approach to real estate has allowed Brad to stand out in a market of over 5000 realtors. His knowledge of home design and construction as owner of a renovation firm for 15 years helps him advise his clients on the purchase or sale of their home.