Don't Panic! Real Estate is a Long-Term Investment

Some things in life are significant risks: sky diving, participating in a polar bear swim, and antagonizing your mother-in-law. Luckily, one of the most significant purchases of your life doesn't usually come with that "big risk" warning label. Purchasing housing in Dufferin doesn't have to be terrifying, we promise. 

There has been a lot of media attention on the current condition of the real estate market. There’s plenty of debate about whether or not it’s the right time to buy or sell your home. We understand how concerning that can be, especially as the prices of everything else seems to be on the rise. 

However, we’re here to tell you: don’t sweat the small stuff. Real estate is a long-term investment. Want to know more? Read on for the details. 

If you have seen anything about real estate in general lately, you'll have heard things like "the market is slowing down" or "wait to buy; the housing market will continue to soften." The market is correcting itself after the wild-west-like market we saw in late 2021 and early 2022. As a result, houses are staying on the market significantly longer than they were at just the beginning of 2022 when homes were regularly going well over the asking price after receiving multiple offers in rapid succession. 

That’s not a bad thing. While sellers reaped the benefits of a high-demand market, it was fast-paced and stressful, and especially expensive for home-buyers. As the market stabilizes and it’s not an all-out battle between realtors for each home, it feels slightly like a backslide. Who doesn’t want their home to have 15 offers? But that kind of real estate market isn’t sustainable or productive for anyone. A change was inevitable. 

The simple answer is that the real estate market responds to the temporary elements that affect it most: the Bank of Canada's interest rate, inflation, and employment rates. The interest rate has increased significantly recently, from 0.25% to 3.25% since March of this year. Many factors go into the Bank of Canada's decisions to increase or decrease the interest rate. The takeaway here is that it fluctuates, as do the other elements. So what we're seeing now could be drastically different from what we see 6 months or a year from now. 

 Housing prices fluctuate over months or even a couple of years. But when you look at a home's value over time? You almost always come out as a winner. 

Take a look at the chart below. The red line represents the Housing Price Index, or HPI, for Dufferin Region. This statistic is calculated based on the price of your "average" home, which means they have excluded extreme prices on both the low and high ends, and then calculated the average. (Learn more about how the HPI is calculated here.) 

As you can see, despite a steep drop from the beginning of 2022, Dufferin's housing values have increased steadily and dramatically since January 2020. 

Home values now are just slightly above where they were at this time last year. That’s a win for everybody. 

The bottom line here is that while home prices fluctuate in the short-term, you will more than make up for the price that you paid for your home. The time to buy, or sell, is when you are ready, not when the market (or anybody else) says so. Your home is your investment in your future. 

We have told clients that we have never heard a person say they regret what they paid for their home. We know this will remain true, even as the Dufferin real estate market finds itself. 

 

Want to know more? Ready to take the plunge? Contact Us