I noticed a property come on the market over the weekend and looked into its sales history. The home is currently listed for $899,900 and the current owners purchased the property in May/21 for $918,000. Taking costs to sell into consideration the Seller will walk away with a loss somewhere in the range of $50,000.
What caused me to think about this sale was a video I watched over the weekend. I am pondering the idea of buying some stock in Tesla and watched a great breakdown of what has happened to the stock values over the past decade. The value in Nov/21 was just over $400/share (USD) and since that high it and the stock splitting two times, it is currently at $120/share. Is it the time to buy, or should we wait to see if the stock has hit bottom.
What caught my interest was how the Youtuber talked about the value of the stock. You could have replaced the term “stock price” for “real estate price.” He reinforced something that I have shared for decades selling Real Estate in Durham Region. That holding long term is the best strategy.
The story he shared to make his point was about the future of Tesla. if you believe that over the next 5 – 7 years the value of Tesla stock would be in the $500 range, the price you pay for it now is not a barrier, assuming you can afford the buy. He said if you bought it at the current value of $120/share or waited until it came down to $90/share that the savings of 25% to purchase would be offset by the increase of around $400. His way of investing was to get in and hold; that time in the market is more important than trying to time the market. He even went on to say that if you waited and paid $130/share in the end if the value increases dramatically, your increase really takes care of a small increase at the time of purchase.
My partner Wendy Starr and I purchased our current home in Feb/17, when the market was red hot and we paid $115,000 more than the asking price. Crazy huh? We should know better as realtors. Currently the home has increased somewhere in the range of 65%! Our belief was we paid top price for our home; however, our goal was to live in the home for a long time and we truly felt that in time the market would continue to increase. And it did – dramatically.
The townhome I mentioned earlier is a good example of why real estate, like stock in companies is a long-term investment strategy. When you think long term, your worries about what happens short term are less worrisome. Another example is what happens inside your RRSP. If you are in your 30’s and have investments in an RRSP what happens on a monthly or yearly basis is not overly important. The only important time is when you decide to take money out of your investment. The same applies to the value of the home you live in; the value is most important when you decide to sell.
Have we hit bottom in Durham Region? The values in Oshawa bottomed out in July/22 and are up since then. Whitby, the values came to their lowest point in Aug/22 and jumped by $46,000 the following month.
Rates are moving up yet are still at lows we have very seldom seen over my 38 years selling Real Estate in Durham Region. This is a golden opportunity for local Buyers.
If you want to plan for your future, the best investment you can make for the long term is Real Estate. Oh, and the next best investment is to pick up some Tesla stock before Elon Musk gets his act together and the values do what SpaceX is doing – shooting straight up.
If you are planning on investing in Real Estate, here is the Real Estate Buyers Checklist:
- Gather a list of the savings you have on hand, along with your debts are and your current income.
- Meet with a local Real Estate Broker and go over the buying process, the closing costs you need and how all of the paperwork flows.
- Get pre-approved by a Mortgage Broker. This locks in today’s rate for 90 days giving you the protection of the current rates in case the rates rise.
- Create a timeline on when you can feasibly move into a home. Even if the timeline is a few years out, creating a weekly savings plan will help you immensely. (A $4 Starbucks coffee a day at work will cost $2,000 over 2 years.) Saving is that simple.
- Pay off any high interested revolving debts. (Credit cards, lines of credit or any department store bank cards.)
- Call or email Lindsay Smith or Wendy Starr to begin the process of becoming a homeowner or an investor.
If you have any questions, feel free to reach out. lindsay@buyselllove.ca or 905-743-5555
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