Friday, January 14, 2011

Panicky Beurocrats threaten to put a damper on the Real Estate Market again....

In a chilling reminder of what happened to our market as of July 1st, 2010, it is today being speculated that Jim Flaherty, our wonderful Finance Minster may act to stem the scourge of consumer credit that us Canadians are apparently awash in. 

Pundits have been ironically warning us for nearly a year, as our spending lifts the country further from the throws of a double dip recession, and distances us from our under-water American counterparts, that our growing household debt is a problem. 

Am I talking about raising interest rates?  Not likely at this point.  This certainly wouldn't help our escalating Loonie keep pace with the rest of the world.  What is being suggested today has far more sinister consequences for the real estate market.  For buyers and sellers alike. 

The reduction of the maximum mortgage amortization from 35 years to 30 years (or even 25?). 

Two years ago, maximum amortizations were reduced from 40 to 35 years. The results on the Real Estate market were difficult to track, as local pricing / market trends were all over the place in 2008. 

This time around, I'm 100% certain that it will chill an otherwise recovering new and re-sale housing market in Woodstock.  Let's look at a scenario.

December 2010's average sale price in Woodstock was $183,107.

Assuming 5% down over 35 years at a fictional rate of 3.94%, your payment would be $760.65

At 30 years, payments translate to $821.28

Under the same terms, at 25 years amortization, the payment balloons to $909.37

With Woodstock property taxes increasing at par with assessment phase-in, HST now in full effect on Hydro, gas, and other services,  the dawn of Metered Water services, Time-of-day Hydro usage, Rising Garbage tag prices, and other financial pressures on the household, what do you think could happen to the value of your home? 

Fewer buyers able to buy, fewer sellers able to sell for "what they need" out of a home... 

Basically, a big chill.  2007-2008 all over again.

The time to list is now.  Seriously!

Ben Sage, Sales Representative. Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON

No comments:

Post a Comment