My, that boom was wonderful while it lasted, wasn’t it? But times have changed. If you’ve still thinking of your home as a fountain of wealth, it may be time for some sober second thoughts.
Home prices across Canada slid more than 10% over the past year and the slump shows no signs of ending soon. Homeowners shouldn’t panic, especially if you’ve lived in your home for years and have built up substantial equity, but you should realize that sellers are no longer the ones calling the tune. Tsur Somerville, associate professor at the Sauder School of Business at the University of British Columbia, says home buyers can afford to take their time and be aggressive about price. If the downturn deepens, bargains will appear, particularly in two areas.”High-end homes and vacation homes are historically the most volatile in a recession,” says Somerville. “There are a lot fewer buyers for mansions during a recession and people under financial pressure are eager to get rid of their vacation homes, so you may see some very attractive prices in both sectors if the economy gets worse.”
Our advice to buyers? Be patient. It takes a year or two for economic distress to be reflected in real estate prices. So wait for 2010. That looms as prime time for mansion shopping or cottage buying.