# First time buyer, what would you do?



## THE_UNIT (Feb 25, 2011)

I know there are related threads but i just wanted to get my situation across.

I'm 23 make over 100k a year live in Red deer Alberta. I can get a house here with garage 15 years old about 1500 sq ft in a decent area. I don't know what to do though i'm scared if i jump in now i'm going to lose my @ss! People have been talking about the uncertain real estate market ever since the US took a dump. I only pay 500 dollars a month for rent. I would like a professional opinion from some of you gurus out there. I have about 30k for a down payment.

Thanks


----------



## ddkay (Nov 20, 2010)

Are you going to live in Red Deer the rest of your life? Buying a home kind of ties you down to a small area. If you are sure as possible you will have secure employment, then it's safe to settle there. Your house is a place to live. What does a downturn matter if you have cash flow and no plans to sell in the next 60+ years?


----------



## dogcom (May 23, 2009)

Not all markets are the same meaning your area may be priced right. When we talk correction we are looking at Toronto and Vancouver and areas around that. 

Saying that what is the prices like in your area and what are you looking at.


----------



## Berubeland (Sep 6, 2009)

You're 23 and you pay $500 per month in rent. Good Job, why fix what isn't broken? 

Want a nicer place? Go pay $600 :biggrin:


----------



## THE_UNIT (Feb 25, 2011)

I'm not sure i will want to live there for the rest of my life but i do really enjoy it. It's not as small as you may think 100 thousand right in between Calgary and Edmonton more populated than most people may think. It has everything a person needs, close to the mountains and a beautiful place. Economically things are great but kind of oil dependent like most of Alberta. The only reason i pay so little for rent is because i rent a room in a house with roommates. If i were to rent a house like i mentioned in my first post i would be looking at $1500-2000 a month.

I just want to make the right decision financially and that is why i came here for opinions.


----------



## cash (Mar 5, 2011)

If I were you, I think I'd wait at least a few years until you have more roots and more certainty in your future plans. An easy way to loose money in real estate is paying agent fees on the sale because you didn't make a good choice/had life circumstances change and became forced to sell. Take your time, look around and save some money. With your income, you might be able to get a 100% down payment if you save up for a while. 

Additionally, I think you will have more fun renting at your age. You can have parties at your house and not worry about being a responsible home owner.


----------



## Dmoney (Apr 28, 2011)

Or, you could buy and rent rooms to your current roommates. The numbers on that kind of investment can work out very well, and while tenant rights aren't as crazy in Alberta, so this might not be an issue, I think if you're sharing kitchen/bathrooms in Ontario, you can kick bad tenants out on a whim. Definitely takes a lot of the risk of terrible tenants away.


----------



## Chris L (Nov 16, 2011)

You're 23 and the market is as high as it's ever been. I bought when I was 21 in 2001 when the market was near stagnant. Now's not the time to rush in, so take your time until the itch is so bad and it feels so right that you can't stop yourself.

You're in a unique situation where only 5% of your income goes toward housing. Don't spoil this. When you get a house you might be spending up to 30%+ extras to maintain your living expenses.

Who knows, you might want to move for work or to catch a mate. You might want to travel, spend some money on various toys or retire extremely early. There's plenty of other ways to spend money than on a bunch of sticks and concrete.


----------



## steve41 (Apr 18, 2009)

Firsty, it depends how much the house costs. If you buy for no more than 230,000 and the house is in good condition (no oil tank underground or major repairs/renos needed), then it might not be a bad idea-especially if you you can find suitable, trustworthy renters. If you can rent out two or three rooms for 500 each then it might not be a bad idea. It's good to plan ahead and if you like Red Deer and see yourself staying put for at least the next ten years then it might be a good move. If the house is more than 350,000, I would wait.


----------



## peterk (May 16, 2010)

Macro-wise, I'd bet on strong red deer real estate markets into the future. I see a big group wanting to move from growing Calgary and Edmonton as the sprawl gets out of hand and people opt to leave. Add in the cohort of boomer retirees coming up that may want to stay in Alberta but not in such a big hectic city. Additional draw for the boomers will be the lakes around Red Deer, where none can be found in C or E. The nail in the coffin would be the bullet train, when(if) installed will turn Red Deer into a booming commuter town.

This is off the top of my head though. I don't know jack about real estate.


----------



## the-royal-mail (Dec 11, 2009)

I don't see the rush or the overwhelming need to buy a house in any hot, overpriced market today. *If* you are satisfied with your current living arrangement then I see no reason to change it. I suspect you work hard, long days and are tired by the time you get home. If so, why would you want to add on the burden of having to maintain a house? Remember the RE market feeds the RE industry from your long work days. Why pay for that? When you sell the house later on you'll also have to pay RE commissions.

Besides all that, there is no rush. There will always be houses available to buy. Now, next month, next year, 5 years, 10 years from now etc.

peterk makes some good points also. At this time, based on what little I know from your post I would say this is *not* a good financial decision. Just my opinion though. I could be completely wrong as you may be in a market that may stay strong due to oil and what peterk said. Ultimately it's your call.


----------



## themortgageguy (Jun 28, 2012)

I don't see a rush to buy either.

A house is a lot of work to maintain and at your age I sure had better things to do with my time. It's also more expensive than renting. Buying a house just to buy a house is not a great idea. Assuming you don't need more room or have a significant other giving sometimes not so subtle nesting signals, I'd wait.

That being said even though real estate prices in your area may come down, its important to research the past history for fluctuations in price over the past years for Red Deer and decide from that what your risk is for being upside down in your purchase. As an earlier comment had noted not all geographies are the same. This is a good place to start:

http://www.crea.ca/statistics

You also need to do a gut check on your job security.

You're probably considering it now because of the interest rates that are available. Very tempting indeed. The key is to get a pre-approval for as long as possible. Although the big banks typically only provide 90 day pre-approvals for resale homes, for clients in your situation I get a pre-approval for 6 months. That gives you enough time to see what the market is doing AND holds a good rate for you AND guarantees the lowest rate in that 6 month period. If you don't use it no big deal it expires and can be renewed.

I'd also suggest you consider a rental property of 2 to four units if you really are going to buy. You live in one and the tenants pay the mortgage or a good portion of it. You already have roommates so you're tolerant of other people under a common roof. That way if the property doesn't appreciate you still have cash flow.

Rob


----------



## Sampson (Apr 3, 2009)

peterk said:


> Macro-wise, I'd bet on strong red deer real estate markets into the future. I see a big group wanting to move from growing Calgary and Edmonton as the sprawl gets out of hand and people opt to leave.


I don't see this happening at all.

People are settling outside of Calgary and Edmonton, but in the commuter towns. There are plenty of options around Calgary, where you can work in the city and live in the country. Towns like Airdrie, Chestemere, Okotoks are among the top 10 fastest growing communities in Canada. Why would people move to Red Deer? It neither has the employment and income of Edmonton nor Calgary, and is not a classic retirement community. Last I checked, Albertan's were buying properties in BC and on Vancouver Island. Check out Courtney-Comox's boome bust as it relates to Alberta's economy.

That being said, there are a lot of companies keeping staff in Red Deer and there is a big influx of migrant workers - I'm guessing they are out of Province though. If you were to buy, I suspect you would be able to find people to rent out portions or the entire house.

Financially, none of us have seen the numbers, none of us understand the housing situation in Red Deer, it is different from Vancouver and Toronto, so we can't comment on that market.

I think the question you really have to ask yourself is whether you will still be in Red Deer 5, 10 years from now. Any housing purchase without a minimum of 5 years to stay in the location is rushing it.


----------



## Berubeland (Sep 6, 2009)

Where's Potato with his rent multiple answer...

Hmmm, ah yes right here. Kind of. Well there's a spreadsheet, it's free. :biggrin:


----------



## realist (Apr 8, 2011)

Do you get along with your roommates? If your rent is that cheap and you like living there I would stick it out for a while and start saving a huge down payment. I am in a similar situation, our rent in Toronto is only $800/mth for me and my wife so the longer we wait the more we save for a down payment.


----------

