Why You Shouldn't Buy a Home in 2024 In Canada

Summary

The video discusses the volatility of the Canadian real estate market in 2024, highlighting fluctuating sales, rising listings, and varying market conditions across different cities. It advises potential buyers to avoid purchasing homes if they plan short-term ownership, are motivated by fear of missing out (FOMO), or are expecting interest rates to drop. The video stresses that personal circumstances, not market trends, should drive the decision to buy a home. Buyers are also warned against bidding wars and purchasing beyond their means. In essence, buy only if it fits your long-term goals and financial situation.

Takeaways

• 🏠 The Canadian real estate market is volatile, with varying performances across cities and property types.
• 📉 It's not a good idea to buy a home if you plan to sell within 2-3 years due to potential market fluctuations and high selling costs.
• 🤔 Avoid buying a home just because of fear of missing out (FOMO). Buy only when it’s the right time for you, not due to market hype.
• 💸 Don't buy a home expecting interest rates to drop, as they might not go as low as expected, potentially resulting in higher costs and declining property values.
• ⚠️ Be cautious of buying during a time of bidding wars, as this can lead to overpaying for a property and financial strain if the market cools.
• 🛑 Never make an offer without financing or inspection conditions unless you are financially secure to handle potential risks, like being denied financing.
• 💰 Avoid buying a home you can’t afford, especially if you're not prepared for future rate hikes, job loss, or unexpected expenses.
• 🧳 Only buy a home if it aligns with your personal circumstances, such as starting a family, relocating for a job, or needing long-term stability.
• 📈 Don’t try to time the market or base your decision on external factors like market trends; focus on your own financial readiness.
• 💡 Ensure you have extra savings (6-12 months’ worth) before purchasing to cover unexpected costs or life changes, such as job loss or rising rates.

Q & A

Why is the Canadian real estate market described as volatile in the script?

The Canadian real estate market is described as volatile because sales are plummeting, listings are increasing, and market performance varies greatly depending on the city. Some cities are seeing declines while others are doing well, and different sectors, such as condos and single-family homes, are performing differently.

What is the main factor that determines whether someone should buy a home in 2024?

The main factor that determines whether someone should buy a home in 2024 is not the market conditions but their personal circumstances. Buyers should only consider purchasing if it aligns with their long-term plans, finances, and lifestyle needs.

Why is buying a home for short-term purposes discouraged?

Buying a home for short-term purposes is discouraged because short-term market fluctuations can make it difficult to sell a property without financial loss. High real estate commissions, mortgage penalties, and potential property depreciation could eat into any gains, making it a poor decision for short-term buyers.

What risks are associated with buying a home due to fear of missing out (FOMO)?

Buying a home due to FOMO can lead to financial loss, as people may purchase homes they cannot afford, especially during a market peak. If the market corrects, as it did in 2021, they could end up with a home worth less than they paid, making it difficult to sell without losses.

Is it wise to buy a home with the expectation that interest rates will drop?

No, it is not wise to buy a home expecting interest rates to drop. There is no guarantee that rates will decrease, and if they don’t, homeowners could face higher-than-expected mortgage payments while property values may stagnate or drop.

Why should buyers avoid entering bidding wars when purchasing a home?

Buyers should avoid bidding wars because they often indicate that the market is overheating. In such situations, buyers may overpay for a property, and if the market cools down, they could face a significant drop in property value, as seen in 2021 and 2022 when some markets corrected by up to 20%.

What is the danger of making offers without financing or inspection conditions?

Making offers without financing or inspection conditions is risky because if the buyer cannot secure financing or discovers issues with the home after purchase, they could lose their deposit or even face legal action. This approach should only be taken by those who can pay in cash or handle unforeseen issues.

What financial precautions should be taken when buying a home?

Buyers should ensure they have 6 to 12 months of savings in addition to their down payment to cover unexpected costs such as rising interest rates, job loss, or home repairs. This financial buffer helps prevent the risk of being unable to afford the property in the long term.

Who should consider buying a home despite the volatile market conditions?

People whose personal circumstances warrant a long-term commitment, such as a growing family, a new job requiring relocation, or a stable financial situation, should consider buying a home. These individuals should not focus on market timing but rather on their specific needs and stability.

What is the overall message regarding external factors and buying a home?

The overall message is that external factors like market trends, interest rates, and bidding wars should not dictate a home purchase. Instead, the decision should be based on personal and family circumstances, ensuring the purchase aligns with the buyer's long-term goals and financial stability.