BC Sunshine Coast real estate by Menno at Royal lePage Real estate on the BC Sunshine Coast

If you can lock in 5-year mortgage money for just about 3% flat, then you’re borrowing money for a house purchase at next-to-nothing. The rate of inflation alone will take care of most of your interest expense. What a bargain!

Oh oh, what's happening to our mortgage rates? They were "supposed" to go back up again but look at it now: they are still hovering at record lows.

Record-low interest rates combine nicely with the mild purchase prices of homes on the Sunshine Coast. Conditions are ideal for buyers, right now. On top of that, finding a nice home on the Sunshine Coast isn’t hard – we have excellent selection. Not only will the price be a pleasant surprise, paying for it with low-low mortgage rates makes it even better.

Predictions vary but almost all people “in the know” appear to assume that our low-low interest rates will not last. The rates are the consequence of government stimulus decisions that will end at one point. Many economists have warned us that the interest rates are “about” to go up; they haven’t just yet. When interest rates go up, the affordability of homes will lessen – just because one’s mortgage payments will be higher (unless you’re locked in, of course).

Many economists have also pointed out that higher mortgage payments may not even be a problem. After all, they would be tied to economic improvements. When people earn more money, they can afford the bigger mortgage payments. This would most benefit those that are already in the market, particularly those that have a mortgage loan on a longer term. They would even see their income go up but not their mortgage payments – for a number of additional years.

Perhaps we can't predict the future but we can look and understand what's happened in the past so we don't make similar errors, time and again.

WHEN WE LOOK AT THE FUTURE

Who are going to purchase and own Sunshine Coast homes in five to ten years? Is the next generation going to be ready to take the plunge into home ownership? Three out of four high school grads aged 17-20 expect to own a home within 10 years; they also generally believe they’ll be much better off (financially) than their parents.

As it turns out, about half of 20 to 29 year-olds haven’t even left the nest yet, according to StatsCan. This is double the number of those who were still living at home 25 years ago. Youthful optimism has always existed so there shouldn’t be any surprise in this divergence between expectations and reality. Young people are supposed to be overly optimistic about their future finances, to many it’s a major life motivator. The reality is that only about 40% of 25-29 year old Canadians are actually homeowners

Average 17-to-20 year-old respondents also expect to earn just shy of $100,000 in 10 years’ time. This amount represents about three times the actual average income for current 25-to-29 year old workers with a post-secondary degree. Combining the lesser-than-expected income with the higher housing expectations is going to be an interesting challenge. Life is expensive these days, even for those still living at home. Standard expenses like a smartphone ($100 a month), transportation, clothing, partying and holidaying leave very little for regular life expenses like housing and food, let alone paying off old debt. Safe to say, it’s hard to save money and even more difficult to get ahead. It’s sometimes even somewhat discouraging.

Would you rather spend all your money and have nothing to show for your efforts or PERHAPS we can start to build equity in a home you'll eventually pay off entirely.

GETTING INTO THE MARKET

To many young people, getting into the real estate market right now might still be good advice. If you can combine aggressive career advancement with long-term record-low interest rates through careful mortgage borrowing, then you have a winning combo. If that were to come together with continued property appreciation, then you’d be way ahead of the curve. Obviously, it’s impossible to predict the future course of interest rates or the values of market development. Still, you got to live somewhere … how about living in your own house as opposed to the landlord’s?

If mortgage payments are about equal to rent payments now, then you’ll be ahead of things later, as an owner. This is because you tend to pay off a mortgage loan over years – not rent. Really, rent is money out the window; not only that but you can expect a rent increase at some point in time. It’s highly uncommon for rents to ever go down.

Buying a home is a strategy – a path of financial planning is included in that. Over the years, it has been proven time and again that home ownership is a secure way to build future equity. There’s nothing quite like an owned home when you reach a certain age. If you hadn’t purchased a home, you’d still be renting.

It's good to know what you're talking about in real estate. Here are some suggested blog articles that you may also find interesting (links below).

MORE financial blog articles, related to real estate, can be found here:

The proof’s right here (the market 10 years ago): http://www.mennorealty.ca/Blog.php/jan2003

Going once, twice, sold: http://www.mennorealty.ca/Blog.php/the-logistics

Here is the proof of the rates this low: http://www.menno.ca/?p=19607

Buyers’ warning of staged homes: http://www.mennorealty.ca/Blog.php/beware-of-staged-homes

The drive towards fixed rate mortgages: http://www.menno.ca/?p=19534

A mortgage money bargain: http://www.mennorealty.ca/Blog.php/tremendous-bargain