There’s a postpandemic period of reflection coming where we look back on the decisions we made while COVID-19 raged and wonder, what the heck were we thinking?
Get ready for it, home buyers. Living in a big home in the suburbs may suit you now, but will you be able to afford your mortgage after you renew it at much higher rates?
We’ve heard a lot in recent months about how the pandemic is driving the real estate market. People want bigger homes with yards and they’re going after them in such a frenzy that the national average resale housing price jumped 22.8 per cent in January on a year-over-year basis.
But low mortgage rates are the real reason why the market has taken off. Prices have risen a lot, but the cost of financing the purchase has fallen enough to make home buying affordable in many cities.
If you could script an ideal housing market, it would have sharply rising prices to reward owners and ultralow mortgage rates to help first-time buyers get in. That’s our reality today, but it won’t last.