We all face a very uncertain time over the next six to twelve months as a result of the changes made to the way we live caused by what governments and societies have had to do to limit the spread of the Corona virus to protect our health care service, facilities, health care providers and those who are at the greatest risk to their health because of the virus. Uncertainties about our livelihoods, the threat to our health, our environment, and the way of life we have become accustomed to are all concerns that we share right now. Since the cost of housing ourselves and our family is one of the biggest expenses in our budget, it constitutes one of the most important considerations we need to address in how we move forward at this time.
One of the many questions some of us will be asking ourselves is whether we should proceed with our plans to move house, to sell our home, to buy a home or perhaps to rent a property and for others perhaps they will be wondering whether this is a good or a bad time to buy, rent or sell.
As we have been helping our clients from many walks of life to answer these questions for over 13 years in Barbados and for longer than this internationally, I thought it would be prudent and helpful if we threw some light on the many questions that our clients may have when it comes to buying and selling real estate at this time.
Many questions need to be answered to determine whether or not you should buy rent or sell at this time and I have attempted to ask and address some of these below.
These are not easy questions to answer and in many cases the answers will depend on your own personal circumstances (what kind of work you do, where you live, what other options you might have).
While none of us has a crystal ball that will show us what the future will look like, there are some practical ways we can go about asking ourselves these questions in order to help us to determine what is most likely to happen in our own situation and which direction is therefore the best option for us to take based on the information we have and the facts we know.
So lets look together at the questions and see if we can break them down so that we are able to look for pointers that might help us to get some direction in our own particular set of circumstances.
Should I sell my house?
To help us make this decision we first need to answer these questions
Quite often you will find that there is an overriding answer that strongly recommends you take one course of action over another. For example, if you have outgrown the house you live in (you got married or had another child) then moving house is likely to make you and the family more comfortable even if it doesn’t reduce your cost of living, but raising a family is not usually a money saving exercise at the best of times.
Can I afford to move to a new house?
Your motivation for moving house should be based on sound judgement or needs such as reducing your commute time, or moving out of an apartment into a house with an office so you can work from home and a garden so you can have a dog. You should also look at your finances to ensure that you can afford the costs associated with moving house and the monthly mortgage and running expenses (utilities, insurance, land tax).
Will I be able to get a mortgage?
It is likely that lending institutions are going to be more cautious when it comes to lending funds for a mortgage so you need to be sure that you can qualify for the amount you wish to borrow. Having said that, interest rates are already low, and they may go even lower with lending institutions brimming with cash as it becomes harder to find secure places to invest institutional funds that will give an attractive return. We suggest you talk to your lending institution and to one or two of their competitors to see who is willing or even keen to work with you to find the best option for your particular situation and needs. Lower mortgage interest rates could mean you would be paying less in monthly mortgage payments than you are currently paying in rent for a similar or larger home than the one you currently rent. If that were the case you should seriously consider buying.
What if I lose my job?
If you are in an industry that has been particularly hard hit by the Corona Virus situation (restaurants, airlines, entertainment etc.) then it may be wise to wait until your industry and your particular business or company have re-established their position in the market and you are comfortable that your job or position is reasonably more secure. There is no such thing as a job for life these days so at some point you are likely to have to take some level of risk, if you are comfortable doing so, in order to get onto the property ladder. Some people prefer to rent than to own a property, there are pros and cons to both of these choices and I address some of these below in our next question.
Should I rent a property instead?
There are benefits to renting a property instead of owning and I have listed some of these below
However, there are also benefits to owning a property
Your appetite for risk, your financial aspirations and your wish for stability are all factors that you need to take into account when deciding whether owning or renting is a better option for you.
Is the market going to get better or worse?
This final question is rightly positioned at the end of our assessment process as it should have the least amount of influence on our decision of whether we should buy, rent or sell a house. Where we live and the type of house we buy, rent or live in should first and foremost suit our every day lives and our needs and secondly meet our hopes, dreams and aspirations for a better standard of comfort. While it is true that buying a home can be one of the biggest financial decisions of our lives, it should first be based on what our needs are as opposed to being viewed as a sure fired financial investment that will save or make us a lot of money.
Owning your own home does bring a certain sense of achievement. The prospect of passing on the wealth or ownership of a property to your children will give a sense of attainment and fulfillment, but taking on the responsibilities that come with home ownership may not be for everyone and purchasing a property in order to make money instead of the satisfaction and stability that it brings could lead a misguided house purchaser into a negative equity position that will not do their bank balance or their ego any favours.
The main aim of this article is to highlight the issues that you should consider and to raise some of the questions you should answer so that you are in a better position to make as informed a decision as possible should you be considering buying, selling or renting real estate in the next 6 to 12 months.
