A recent poll shows that a lot of people who bought at the peak are happy with their purchases.
People who bought homes when prices were high earlier this year might be wondering if they made the right decision now that prices are falling.
Home buyers and sellers have been aware of remorse. Remorse can set in when a transaction is agreed upon in principle.
The Financial Post is part of Postmedia Network Inc. There was an issue with signing you up. Try again.
The seller might think they were too quick to accept an offer and wonder if there could have been a better offer. After their offer is accepted, buyers are more likely to be remorseful since they fear they may have overpaid.
When housing markets are balanced with moderate increases in prices, real estate agents are able to convince buyers and sellers that they have made the correct decision. It becomes more difficult when there is a large decline in housing prices.
The decline in average prices is more pronounced than the size and quality-adjusted housing price index. Since price movements with larger deviations from the long term trend influence consumer sentiment more, the idea that buyers' remorse is more pronounced now is taking root.
In the Greater Toronto Area, the average housing price was less than a million dollars in August, a decline of more than a quarter of a million dollars. The people who bought at the peak of the market must be wondering when they bought. Some might be feeling remorse, but maybe not as much as people think.
The majority of people who bought a home during the Pandemic were very happy with their purchase, according to a recent Zolo survey. 63 per cent said they would still be happy in their home even if the real estate market went down.
People who moved to a different province were more likely to be satisfied.
What about the risk-takers who were fast and loose with their buying decisions when they bought homes? More than half of these buyers expressed continued satisfaction with their purchase. 42 per cent of such buyers might be having mixed feelings.
84 percent of those who paid over the list price were still happy with their purchase. They may not have overpaid due to the fact that list prices were deliberately set lower than recent comparable sales to attract buyers and encourage bidding wars.
According to the Zolo survey, buyers' remorse is not as widespread as has been reported.
Concerns about remorse are overstated. Talk of remorse is anecdotal and based on conversations with a few real estate agents.
The majority of buyers bought homes to meet a need. The survey found that 53 per cent of buyers needed more space, 43 per cent were tired of renting, and 28 per cent thought buying was a good investment opportunity.
The lack of widespread remorse is due to the fact that most people know that even with lower housing prices, their mortgage payments could still be higher because of high interest rates.
Take a look at the mortgage payments. With a 20-per-cent down payment and a five-year fixed rate of 2.3 per cent on a 30-year mortgage, the monthly mortgage payment for an average-priced house in the Greater Toronto Area would have been $4,300 in February. $4,300 in mortgage payments is required for an average-priced home despite being cheaper. Over the life of the loan, borrowers will pay more in interest.
Buying a house is a long-term decision for most families who want to live in the same house for a while. An investment in people and places is not just a financial one. Those with a long-term horizon don't need to worry about remorse.
The director of the Urban Analytics Institute at Toronto Metropolitan University is a professor of Real Estate Management. Stephen Moranis has been in the real estate industry for a long time. The website www.hmbulletin.com is where they can be reached.
All Rights Reserved © 2024
