We often see comments like this when we share market stats on social media:
“It doesn’t matter if the market goes up 20%. If you’re selling at a higher price, you also have to buy at a higher price. It’s a wash.”
Logical argument. But, there are two strategies many of our clients are using to achieve significant equity gains on both their principal residence and their new home.
Here’s what they’re doing (and be sure to contact us below to ask about opportunities they’re taking advantage of today):
1) Upgrading or downsizing to pre-construction homes/condos
The strategy: lock in a pre-construction home at today’s prices, wait a year or more for it to be built, then sell your principal residence when the new home is ready. If market prices increase during construction, you’ll sell for more (with the additional year of appreciation) PLUS you’ll gain a year of appreciation on the new home (because you locked it in at yesterday’s prices). Double win!
2) Leveraging equity gains to invest in a pre-construction rental
Ok, this isn’t selling – but it’s an option taken by many of our clients. They’ll get their home reappraised (in many cases, at a value up to 50% higher than 4-5 years ago) and use their equity gains to purchase a pre-construction condo that they’ll rent out. They’ll continue to gain equity on their principal residence as well as their new pre-construction property (+ get cash flow and mortgage pay-down from the renter).
To be clear, in both cases, the assumption is that prices will rise. That said, and while there are never any guarantees, the current market dynamics strongly suggest that Waterloo Region home prices will continue to rise in 2021. There is a lot of room for growth!
If you’d like to learn more about how to buy, sell and invest in today’s market, get in touch below. We’re here to help.