Is it good time to buy PEI home or property?

Well the short answer is yes! However perhaps not for the reasons you think. You are probably thinking that with the downturn in the economy home prices will go down and you will buy into the market more cheaply. That is true! However any time is a good time to buy a home.

Why? In the long haul (and in real estate when the property is the home you live in we are always talking about the long haul) real estate values go up. You are worried however that if you buy just a little too early that you may pay a few thousand dollars more than you really had too. It is amazing that on a purchase often of 3 or 4 hundred thousand dollars people will always worry if they got the really, really best, "I squeezed that vendor for everything he would give", best price. Does it matter? Let's think about that. Usually, every thousand dollars that you spent on the purchase of your home cost you $6 per month. So if you purchased a home at $300,000 your monthly payment might be in the $1800 per month range. Now suppose you had squeezed that vendor for another $2000 off ie $298,000 you would be paying $1788. You might have risked getting the home for $12 per month. How’s that for macho - and believe me, women squeeze just as hard as men.

Assuming that you are buying a home and not an investment, and assuming that you will live in that home for 10 years or more, the price you paid will not have as big a bearing on what you make at the end of the time as you think. A home is simply not going to make you anything until you either die and don’t need anywhere to live, or retire and downsize thereby taking out some of your equity or move to a seniors home and free up all equity (and even then you are going to be paying some major rent)

So as you can see, you only realize your equity portion of home ownership of PEI real estateonce you no longer need a home or as much of a home. Homes do not statistically perform as an investment as well as stocks and bonds, but the attraction of a home is that you get the added advantage of a place to live.

So property purchase is highly recommended to those younger people who can look at it as a way to save and have a place to live. The proceeds from the house sale may in the future pay off the mortgage and provide a nice nest egg that will have largely escaped erosion by inflation.

Let's say you have been unfortunate enough to buy on the spike though and your home has reduced in value to the point that the amount of your mortgage exceeds the amount the home is worth. If you do not have to sell out due to marriage breakup or job loss and can continue to pay your mortgage, you may be a little upset, but realize that the value will rebound and that negative equity is temporary.

The reason that you can count on property to rebound in price is because there simply isn’t enough of it. PEI real estate is a prime example where the water-frontage will continue to be bought up, sold and re-bought at ever increasing price as the waterfront on the rest of the eastern seaboard has already been bought, sold developed and resold so many times that the prices are huge.

In addition to getting an eventual return on your property investment you might also consider buying versus renting as when you own your own property you can better control how you live, how you decorate, etc. So anytime is a good time to get into the property market - if times are tougher as they are now, well it could be a very good time for you to secure your own piece of PEI real estate.