Clink. Clink. Clink. Can you hear that? It’s the sound of people bleeding money in Regina. Why do I think people are bleeding money? Well because our insane little real estate market just finished jumping off a cliff the other day for me.
You see a couple blocks from here a home about 50% smaller than mine just went on the market for $350,000. Which means even if I’m being very conservative the market value of my house just hit an interesting milestone. I’ve doubled in value since I bought the house in 20 months. Yep, that’s right my house value if I sold tomorrow would be at least $380,000.
Why I find this significant is I believe we are now past the initial correction. Granted that for a long time this providence didn’t have a lot to offer, so it had depressed real estate values compared to any other of the Western provinces. Now we have moved past the correction point and are being fueled by pure supply and demand issues. You can’t get a decant house in this town anymore without getting pulled over hot coals with price. Bidding wars are back on for homes and once this ends we should see a correction back down. The issue is I have no idea where the spike in house prices is going to end or how far the correction will go down (if nothing else it should have a nice yo-yo effect on my net worth).
In short I feel this is a dangerous time to be buying a home here. I don’t feel it is impossible to get a decent deal, but it sure getting hard to. You might get stuck buying near the peak and watch your home value fall shortly after buying it (if you don’t believe this is possible I suggest you look now at any US city).
So people would think it would be a good idea to just rent right? Well there are problems with that too. With the house prices shooting up rents have been following a little behind and that assumes you can find one. Vacancy is well under 1% and then you have people selling out complexes and turning them into condos. Renting isn’t even safe anymore.
Therefore it is a very fluid market which seems to be changing daily. I do feel sorry for those people who are looking for a home. This does bring one interesting lesson to my mind. Buying a home over renting has one significant advantage that often gets over looked. The current market can’t affect my mortgage payments, but it is affecting rents. So even if my property taxes go up it will be minor in comparison to my mortgage payment. Effectively you minimize your exposure to local inflation pressures by owning your home over renting. Now isn’t that an interesting idea for planning a 45 year retirement?