Jon and Joan had planned to buy a home for many years They saved their money religiously, planning to use Jon s money for expenses and Joan s money toward a down payment on a house that would be close to where they worked They were each planning on using some of their RRSPs for a first-home purchase They didn t like debt, so they aimed to save at least 50 percent of the house price before they would buy At the time, interest rates were 4 percent However, over the five years they were saving, home prices in their area of choice went up 10 percent a year, from $100,000 to $150,000 50 percent more than what they had budgeted The shift in values meant their down-payment savings now amount to a mere 10 percent Moreover, their employment income was not enough to qualify for the 90-percent mortgage, as interest rates were now 7 percent and servicing the mortgage was beyond their means Jon and Joan decided that the only place they could afford was about a two-hour commute outside of town It had nice rural ambience, but lacked work proximity They therefore began a home-based business using their computer skills as Web designers Thanks to technology, they could run their business from home without ever seeing their clients The moral of the story is that one has to have a clear sense of the reality of the real estate marketplace, supply and demand, interest rates, and affordability, and a realistic game plan

Understanding market cycles is important to your success as an investor, both as a buyer and a seller Purchasing a property for a good price when demand is weak improves your chances of selling the property at a gain, if you re able to gauge the direction in which the market is heading! As a seller, a market with many buyers allows you to command a higher price for your property, especially if it is a unique property or one in which buyers have plenty of interest

The typical length of a cycle in the real estate market is five years, though it can last as long as 12 years Some observers argue that market cycles are lengthening under the influence of global investment trends and interest in real estate as an investment The basic cycle itself hasn t changed, however The market goes through three stages in the course of a full cycle These include the buyer s market, the seller s market, and the balanced market A balanced market is the most fleeting of the three, but we give each of them equal time here

Goldilocks used to break into abandoned houses in seedy neighbourhoods to find places to sleep She decided that was not the quality of lifestyle that met her emotional and aesthetic needs So, she decided to get her own place In true fairy-tale form, she was fortunate enough, through the assistance of her unbearable family, to borrow enough money to buy a little house in a buyer s market She worked hard renovating and decorating it over several years, in an area of cute starter homes on big lots The real estate market started to heat up and eventually became very hot Goldilocks sold her home at the top end of a seller s market, as her neighbourhood was now trendy and in high demand She kept the money in the bank, and looked around for a home near the woods By the time she found her dream home, the real estate market was no longer in a frenzy, and normalcy reigned supreme the market was now balanced Goldilocks was able to buy her dream home mortgage-free with the large amount of money she had saved from her first home sale, invest the rest of her cash through a financial planner, and live happily ever after The End