I continue to work with a full slate of investors and buyers these days, and notice that they have slowed down considerably and are taking longer to evaluate their options. Smart.
Rushing head first to submit a full priced offer on the first property with gleaming hardwood floors has ebbed as the year winds down, and the ratio of properties sold to price reductions over the past several weeks backs this up.
So how are smart buyers thinking these days?
1. Firstly, that real estate (condo, townhouse or otherwise) is an alternative to renting and that their equity is the investment. I have always felt that too many buyers put too much faith into the investment side of their real estate purchase, having been seduced by stories of $50K plus profits in just a year. Long term appreciation is the gravy, not the goal, for smart real estate shoppers.
2. That a 5% downpayment is a nice start, but 10% is even better, and to allow oneself breathing room with the monthly costs (mortgage + taxes + fees) to accommodate any increase in interest rates.
3. Lastly, that it makes sense to work with a realtor experienced in the condo market, particularly one who can speak knowledgeably about which buildings are undergoing special assessments, which buildings have difficult board members, which buildings have units owned by social services agencies, and which buildings are run by investors and filled with tenants.