TLDR: Find the home you WANT and the one you can AFFORD.
Make sure the plan fits your numbers, not the other way around.

The House-Buying Process is Emotional.

There can be several reasons someone would want to buy a home or get into the real estate market.

Maybe you want to grow your family.
Maybe it’s time for a new beginning.
Maybe it’s a sad scenario and you don’t really have a choice.
Maybe you want to build some wealth.
Maybe you’ve just lost your lease and you don’t want anyone to be able to kick you out again.

The countless hours viewing homes online, going through homes with your realtor and family, imagining yourself in a new place, sending the realtor.ca links to your friends and family with anticipation and anxiety – you don’t want to allow yourself to get TOO excited just in case your offer doesn’t get accepted.

Maybe that happens five times in one month and you can’t handle it anymore, but when you start shopping again, things feel different. That’s because buying conditions* can fluctuate almost overnight depending on the type of market we’re in.

*What are conditions? Conditions are put in place at the time of your offer with your real estate agent to protect you in case there is a reason you need to back out of your offer within a certain time frame. For example, there is a condition of finance to allow you time to obtain a mortgage, and there is a condition of inspection that allows you time to have a professional come through and see if there are any glaringly wrong issues that may need to be addressed. There is even a condition for the sale of your current home. You and your realtor can determine what conditions to include and for how long (~3, 5, 10 days) at the time of your offer, depending on how long the house has been on the market or if there is any competition.

The Real Estate Market Ebbs and Flows.

Sometimes it’s a buyer’s market
Sometimes it’s a seller’s market…
and sometimes it’s pretty balanced.

Various factors play into the market and determine whether there is a ton of competition out there or if houses sit for a while.  House values will continue to drop and climb. If you’re in the market to make a quick buck, that is essentially not an option right now. It’s not to say there aren’t off-market homes or private sales, but that’s not the norm and shouldn’t be an expectation.

In a seller’s market 

You’ll find that adding conditions may result in your offer being at the bottom of the pile. A seller wouldn’t necessarily want to wait a period of time for you to sort out the mortgage or inspection if someone else is removing all conditions and buying firm*.

This can open up a lot of risk if you’re unsure what would happen if you can’t obtain financing, if an appraisal comes in lower than you offered, etc. So the only way to get your offer accepted is to go out on a limb and go in firm and hope it all works out. Then, if your offer is accepted, you may wonder if you’ve just made the biggest mistake of your life, and uncertainty can set in. It’s a ROLLERCOASTER. 

*What is buying firm? This is when you offer a home without any conditions, giving you no way out of the transaction without the risk of being sued. In some cases, there is risk with this scenario and other times where this is a reasonable and common occurrence without any issues. It completely depends on everyone’s situation.

In a buyer’s market

The conditions come easier. If a house has been sitting for a couple of weeks and no one else is offering but you, this is your time for full conditions.

The house-buying process is stressful enough, and it gets further hijacked by the worry surrounding the market itself. There are legitimate fears that you may be buying a house that isn’t worth the same amount a year from now, and that if you don’t buy, you’ll never get in.

I can appreciate those fears, which have come true for many, especially in the last couple years. This whole pendulum isn’t new though. But we’re not going to be so naive to think that it isn’t uniquely bad right now… 2020 to present day was wildly unfair and unpredictable for many (don’t worry, I won’t dare say unprecedented).

Knowing if it’s the Right Time is All About Balancing Risk, Reason, and Suitability

There are a few categories to focus on when buying a home.

Risk:

Considering the future value and if this mortgage loan is suitable for you with your income trajectory, spending habits, access to a down payment etc. It’s really important to weigh out what you can afford and your ideal 5-10 year goals as much as you can. Life can change quickly as well so it’s also a good idea to consider if something unexpected happens.

Reason:

Risks are important to consider but just as important is your WHY. Why are you in the market? What are you trying to accomplish by owning a home? If your reason is that you want to make some money quickly, I’d recommend you wait. Timing the market is next to impossible and you could be putting yourself in a vulnerable position.

You can enter this transaction being only focused on money and return on investment OR you can balance your REASON with the RISKS to land on something reasonable and suitable for you. 

Suitability:

This is a major topic in the mortgage industry and important to consider.

Is the loan you want to take on actually suitable for your life?
Is your job on a path for raises?
Are you unsure if your job will renew your contract?
Is this a neighbourhood you want to live in?
Can you afford your payments if interest rates climb?