As the New Year gets underway, the great ‘bull’ housing market we’ve been enjoying for the past 10 years is starting to show signs of slowing its record-breaking pace. While some markets, particularly in Western Canada, are staying strong and are expected to continue throughout 2007, Canadian real estate overall is expected to experience a ‘soft landing’ back to a more normal market.
However, although the market is beginning to moderate in terms of the number of homes sold, appreciation still remains strong on a national basis and it is expected to do so throughout 2007. In fact, the Canadian Real Estate Association (CREA) has predicted that resale housing values, while no longer reaching the double-digit mark of recent years, should still continue to increase in 2007 by an estimated 6% nationally.
In local markets where your appreciation rate may be similar to the 6% increase being forecast nationally, that means there is great reason for buyer optimism.
Let’s take a look at 6% appreciation with 20% down on a $200,000 property.
The down payment of $40,000 will grow to $52,000 in equity, which is an impressive 30% return on the original investment.
If the down payment on the same house is 10%, that $20,000 down will grow to $32,000 and the return will be a whopping 60%!
That’s an impressive return any way you look at it. What’s more, it’s only based on the anticipated national increase of 6%. You may be located in one of many Canadian markets where the local appreciation rate is expected to exceed the national average predicted for 2007.
And this impressive rate of appreciation doesn’t even factor in the tax deductions a buyer might qualify for if a portion of their property is being used for business purposes or as an income property. Best of all, the new homeowner gets to live in their investment and enjoy it as it appreciates. The bottom line? Even if property values increase at a lower rate than we’ve seen in recent record-breaking years, a more moderate appreciation rate still will deliver one of the best returns on your investment you can achieve anywhere.
If you’d like to know more about the historical and projected property appreciation rates for your local community, call your local Coldwell Banker real estate professional. They’ll be glad to show you how investing in property can build your asset wealth while enriching your quality of life.
For more information on the Toronto Real Estate market please feel free to contact me on my website www.epsteinrealestate.com