What if market correction is around the corner?

New 2013 Year is upon us and we all want to know what is going to happen on the Real Estate market in Canada. In my opinion, no one can predict with 100% certainty where Real Estate prices will go in the future. Even the educated ‘experts’ can’t get it right… and they are always offering conflicting predictions.What if market correction is around the corner? Is it good or bad? 

First Time Home buyers 
If you’re a first time home buyer, a slight market correction would be welcome news for you. For now you can still get into home ownership with only 5% down, but since your maximum amortization is now limited to only 25 years, a drop in pricing is exactly what you’ll need to be able to get into this market. Plus in a better market, you would most likely have much more competition for the same house.
Conclusion: A market correction is a good thing for you. 

Current Home Owner - Moving Up or Downsizing
If you are a home owner and you’re looking for the right time to sell your house so you can buy another, you may be concerned that the price of your current home is dropping. But let’s take a closer look at that:Whether upsizing or downsizing, the key to remember in a downturn market is that the person selling their home to you is going through the exact same thing. In other words, if the value of your home dropped 10% so too did the value of the new home you are buying.In fact if you are upsizing you are most likely in a better position because more expensive homes drop in price faster, so you are likely to loose 10% on the sale of your smaller home but gain 15-20% priced reduction on the new bigger house.
Conclusion: In most cases out there, the net effect of a market correction is zero or in your favour. 

Real Estate Investor or Second Home Buyer
If you are buying Real Estate as an investment or as a second home, then this is the perfect market condition for you. When there are more sellers than buyers you have more room for negotiation. Also with the extremely high cost of property, it is difficult to find income properties that will cash flow without a substantial down payment.

Also if more people are selling, more people are moving into rent. Therefore, more clients for you, making your investment more profitable and easier to get a mortgage (with higher rental income)
Conclusion: You should be hoping for a market correction.

Current Home Owner With No Plans To Sell 
If the value of your house were to drop by 10% tomorrow, it would only be on paper unless you sold your house tomorrow. Since you have no intention of selling soon and you can still afford your monthly payments, it would be no impact on you. The truth is that Toronto area is a great place to live, work and play. In an established area with a good public-school district will hold its value.
Conclusion: A market correction may very well have no impact zero you.

Bottom line … market correction is not such a bad thing for most of us. Neither is continuing price growth, which we all enjoyed in the last few years. So whatever happens in 2013 take advantage of it and enjoy the New Year.