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Many people would
like to start building equity in their own home, but are held back by concerns
about cost. In fact, the Canada Mortgage & Housing Corporation estimates
that 40 per cent of renters in Canada
today can afford to buy their own home.
If affordable housing options are available to nearly half of all renters,
what's holding them back?
Sometimes the media
reports of housing prices can give a misleading impression about the cost of
home-ownership. The media typically reports median or average prices without
explaining the distribution of home prices behind those figures.
A median is that price at which half the homes sold for more
while half sold for less. That means that there are just as many homes that
sold at a price lower than the median than those that sold at prices higher
than the median price. The median price doesn't give any indication of the
spread of these prices. Many properties are sold for much lower - or higher, of
course - than the median price.
An average price is the total dollar volume of homes sold for
a particular period, divided by the number of units sold. Average prices are
typically reported for the sales activity in a given area for a given month,
quarter or year, and provide a snapshot of past activity. Average prices of
properties sold in the past give only a limited indication of what housing
inventory for sale is priced at today. An understanding of the housing in a
particular community is needed to put average prices into perspective. For
example, sales of a new sub-division or townhouse project of larger, upscale
homes at higher prices will bring the overall average price up, giving the
impression that all housing prices have risen. In reality, prices for the
older, smaller housing units in the community may not have changed, or they may
have even dropped.
A better measurement technique is the housing price index
(HPI), which tracks the price of a typical, or benchmark property. HPI
statistics can often provide a new depth of interpretation to average and
median statistics. Ask your realtor whether this technique is used in the area
where you wish to purchase your home.
A Realtor with experience in the community in which you're interested in buying
can provide a knowledgeable market analysis and show you what is available
within your budget.
To view properties for sale on the Multiple Listing service, point your
Internet web browser to http://www.mls.ca.
For further information, contact your local Sutton Group realtor. You may well
find that you can afford to own your dream home after all.
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