Why You Shouldn't Buy a Home in 2024 In Canada
Summary
TLDRThe 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.
Outlines
📉 The Volatility of the Canadian Real Estate Market in 2024
The Canadian real estate market is more volatile than ever, with varying performance across different cities. Some areas are seeing drops in sales, others are experiencing growth in specific sectors, such as single-family homes versus condos. The key question buyers face is whether now is the right time to purchase a home, and the answer is less dependent on the market and more on individual circumstances. The speaker emphasizes the importance of personal financial health and situation over market conditions when considering buying a property.
📕 Free Resource for Navigating Canadian Mortgages
The speaker offers a free book called 'Mortgage Secrets' aimed at helping Canadian homebuyers get the best mortgage rates, whether through a bank or broker. The book covers critical information for securing favorable terms and is available for free with shipping and handling fees. Viewers are encouraged to subscribe and engage with the channel for regular updates on real estate and financial advice.
🚫 Why Short-term Buyers Should Avoid Purchasing a Home in 2024
The first reason not to buy a home in 2024 is if the purchase is intended to be short-term. Short-term market fluctuations, mortgage penalties, and real estate commissions can significantly erode equity, making it unwise for buyers who plan to sell within 2-3 years. The speaker advises against buying unless the property will be owned for at least 5-10 years, or unless it can be kept as an investment even after moving.
😱 Avoid FOMO When Buying a Home
The fear of missing out (FOMO) has led many to make poor decisions in the housing market. The speaker warns against buying simply because others are doing so or because the market appears to be rising. Those who bought during market peaks often face financial losses when prices correct. The key message is to avoid letting market trends dictate your decision and to buy only when it aligns with your personal financial readiness.
📉 Don’t Count on Interest Rates Dropping
Another reason to avoid buying a home in 2024 is if the decision is based on the assumption that interest rates will drop. While rates may fall, there is no guarantee they will return to the low levels seen in the past. Buyers who bet on decreasing rates may end up paying more than expected, both in terms of higher mortgage payments and a potential decline in property values if rates remain higher than anticipated.
⚠️ Bidding Wars: A Sign to Stay Away
The speaker cautions against buying during bidding wars, which often indicate an overheated market. Properties with multiple offers can lead to overpaying, especially if the market corrects later. The experience of buyers in 2021 serves as a warning, as many saw property values fall in 2022-2023. Entering the market during such a frenzy can be risky, especially if buyers feel pressured to waive essential conditions like financing or inspections.
🔒 Risks of Waiving Financing and Home Inspection Conditions
The speaker strongly advises against waiving financing and home inspection conditions unless a buyer is prepared to purchase the property in cash. Skipping these steps can lead to severe financial consequences, including losing deposits or facing legal issues if the buyer is unable to secure financing. Only those with absolute financial certainty should consider making an offer without these protections in place.
💸 Don’t Overextend Your Finances When Buying a Home
One of the most critical warnings is to avoid buying a home that stretches your budget too thin. Buyers should account for potential interest rate hikes, job loss, or unexpected expenses. Having 6-12 months of savings is essential to weather financial uncertainties. Hidden costs often arise when owning a home, so ensuring a financial cushion is crucial for long-term stability.
🏡 Who Should Buy a Home in 2024?
Despite the cautionary advice, the speaker outlines who should buy a home in 2024. Those in stable life circumstances, such as growing families, new job locations, or long-term plans, may find it a good time to purchase. Buyers who are tired of renting, have saved for a down payment, and have extra savings should also consider buying, but only if it aligns with their personal needs, not external market factors.
📺 Learn More About the Current Canadian Real Estate Market
To stay updated on the latest in the Canadian real estate market, viewers are encouraged to watch a related video that dives deeper into current trends and conditions. This video offers further insights into what’s happening in the market right now and provides additional context for those considering entering the market.
Mindmap
Keywords
💡Volatility
💡Short-term purchase
💡Fear of Missing Out (FOMO)
💡Interest rates
💡Bidding wars
💡Mortgage penalties
💡Real estate commissions
💡Condition-free offers
💡Savings buffer
💡Personal circumstances
Highlights
The Canadian real estate market is highly volatile, with varying performance across cities and market segments.
Real estate decisions should depend more on personal circumstances rather than market trends.
If you plan to move within 2-3 years, it’s not advisable to buy a home due to market fluctuations and high transaction costs.
Buying a property with the expectation of short-term gains can result in significant losses due to market shifts.
FOMO (Fear of Missing Out) is a dangerous reason to buy a home. Buying during a market peak can lead to financial losses.
Don't buy a home expecting interest rates to drop soon. There's no guarantee that rates will decrease to the levels people hope for.
Avoid participating in bidding wars, as this can lead to overpaying, especially in overheated markets.
Never buy a home without financing or inspection conditions unless you can buy the property outright in cash.
Ensure you have at least 6 to 12 months of savings in case of unexpected financial changes, such as job loss or rising interest rates.
People in life situations, like growing families or long-term relocation, should consider buying if they plan to stay for 5-10 years.
Don't try to time the market or interest rates. Purchase a home only if it's the right time for your personal circumstances.
Buying should only be considered when it doesn't cost significantly more than renting, based on your financial stability.
Hidden costs of homeownership, such as maintenance and unexpected repairs, often catch first-time buyers off guard.
Avoid being pressured by external factors like market trends. Focus on internal, personal factors when deciding to buy a home.
Consider the long-term financial commitment and potential risks before purchasing, including the possibility of future interest rate hikes.
Transcripts
the Canadian real estate market is the
most volatile it has been in history as
sales plummet listings increase and data
depending on where you are is all over
the map some cities are performing well
some cities are performing poorly and in
some cities you have the condo Market
tanking while the single family home
Market is increasing and with all of
this information all this news all this
data out there the question is should
you be buying a home this year and the
answer to that question has less to do
with what's going on in the market and
more to do with your personal
[Music]
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get that now without further Ado let's
get into the video why you shouldn't buy
a home in 2024 in Canada so I'm going to
take you in here and show you a couple
quick points on why you shouldn't buy a
home in Canada this year and the first
reason why you shouldn't be buying a
home this year is if you're buying it
knowing it's going to be a short-term
purchase whether it's as an investment
or whether it's a purchase that you're
going to to make to live in if you're
buying a property knowing that you are
going to be moving in the next 2 to 3
years it's probably not a good idea to
buy there's a couple reasons for that
the first is obviously the fact that
short-term Market fluctuations can make
it very hard to sell a property and can
eat up a down payment very quickly if
you're forced to sell in the short term
in addition to that there's things like
pay penalties on the mortgage that can
eat into your Equity as well as the very
expensive real estate commissions that
can pretty much Take 5 to 6% right off
the top so if you're purchasing a
property and you know that you aren't
going to be owning it for at least 5 to
10 years it might not be the right time
to buy now that's not to say that you
shouldn't purchase the property if you
can plan on keeping it even if you are
going to move but if you know if you
have a definitive timeline and it's in a
very short period of time that you're
going to have to sell that property you
probably shouldn't be buying now in
addition to that there is the next
reason which is fomo because a lot of
people over the last couple years have
been caught up in the fear of missing
out of owning a home and let me tell you
right now that you should never buy a
home just because everyone else is
telling you that you should there's been
a lot of that over the last few years
and the people who have lost the most
are the people who were not ready to buy
a home perhaps couldn't afford it and
bought because they thought that if they
didn't do it they wouldn't be able to
buy somewhere in the future and this is
a real serious problem in the Canadian
housing market people who purchase just
because the Market's going up buy at the
top and then find themselves with a
property that they eventually need to
sell that's worth nowhere close to what
it was bought for so don't buy just
because everyone else is the only time
you should be buying is when it is the
right time for you to buy not just
because there's a lot of activity in the
market now the next reason why you
shouldn't be buying a home this year is
just because you think interest rates
are going to drop because many people
are jumping back into the market
expecting the Bank of Canada to reduce
interest rates and thinking that
somewhere in the near future the cost to
own that home is going to be
significantly less because interest
rates went down but don't get caught up
in the idea that interest rates have to
go lower because they don't and while
they may go lower they're probably not
going to go as low as many people expect
because if at the end of the day you are
surprised interest rates don't go down
to where you think they are and as a
result the housing market takes a hit
you could end up getting a double whammy
of having to pay a higher interest rate
than you thought while at the same time
also having a property that's worth less
because interest rates didn't go where
they were supposed to the next reason
you should and this is never buy a home
during this type of time unless you
absolutely have you is if there are
bidding wars happening if every property
you try to buy has multiple offers it's
probably a sign that the market is
heating up or possibly overheating just
ask all the people who bought in 2021
during that market that seemed to be
going up and up and up where everyone
believed that it would never correct and
inevitably it did in many markets byy as
much is 20% in 2022 and 2023 so if a
market is in a place where there are
bidding wars on pretty much every
property that's usually a sign that
there's some sort of Hysteria and it is
a sign that you're probably going to end
up overpaying for those properties and
in addition to that if you are ever put
in a position where you are instructed
to write conditions offers or where you
feel the need to write a condition offer
so an offer without a financing
condition or a home inspection condition
well you could be finding yourself in a
really bad situation the only time
anybody should ever be buying a property
without financing conditions without a
home inspection condition is when they
know with certainty that they have the
option in some way shape or form to buy
a property without financing basically
in cash so that if they do write that
offer and they aren't able to get
financing they aren't stuck having to
give up a deposit or potentially being
sued by a seller and then last but not
least never buy a property that you
can't afford and especially if you can't
afford it if rates do end up going up if
you lose your job if you don't have
additional savings or if there is an
unexpected recession so when you
purchase a property it's important that
you don't take all of your money and
just apply it to the down payment and
then hope that you're going to be able
to continue to afford that property in
the long run because there are all kinds
of hidden costs that come up when you
end up owning a home and a lot of times
this catches people by surprise so when
you're buying a property make sure that
you have at least 6 to 12 12 months
worth of savings just in case something
happens with the property you lose your
job or if interest rates do go up now
all of this talk about not buying a
property leads to the question of well
who should be buying a property here's
the answer to that people who should be
buying a property are the people who
find themselves in a life circumstance
that warrants actually buying a property
so something like a growing family
something like a new job that maybe has
a longer commute or some other Factor
maybe you're moving from one city to
another and you're going to be putting
down roots for 5 10 15 years or maybe
you just got into a relationship and you
don't want to be living in the old
bachelor pad that the boyfriend slept
with all of his past girlfriends in that
sort of thing so if you're the type of
person who is in a situation where it
makes sense for you to be purchasing a
property then fine do it don't try to
time the market don't try to time
interest rates if it is the right time
for you to change the type of property
that you live in buy a home if you're
paying too much rent you hate your
landlord you've got a down payment saved
and a little bit of extra money on top
of that buy a home as long as it doesn't
cost you significantly more than it
would cost you to rent but outside of
that outside of it being the right time
for you and the right situation for you
don't ever feel like you are being
forced into buying a property don't ever
buy a home based on external factors the
factors that should be leading you to
purchase a property are factors that are
internal to you and your family
situation and that's it it is as simple
as that oh and if you want to see a
video on what's going on in the Canadian
real estate market right now make sure
you check out this video right here
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