What home buyers need to know in a competitive Canadian housing market?

Are you a prospective home buyer in Canada? Oh you’ve certainly got a lot to learn and know about! Let this not stress you out; instead, relish the challenge of delving deeper into the housing market in order to get hold of the best possible deal for yourself. There are definitely a few things worth knowing if you are going to buy your own home since the market is hugely competitive at the moment.

What home buyers should take a note of?

In latest developments, more Canadian citizens are adopting newer approaches towards home purchases which are non-conventional. Here are some of the key trends or facts to note in this regard.

  • Citizens perceive the realty market as more balanced between sellers and buyers for the very first time in the last 5 years as per reports.
  • 28% of buyers individually purchasing homes are depending on their families for financial assistance while 32% are purchasing individually.
  • 47% of expected homebuyers are looking to pay in excess of 15% as the down payment.
  • Solo buyers are increasing in number, i.e. those who have the confidence to buy homes by themselves.
  • 47% of Canadian citizens have reportedly opined that home ownership is worth the load of paying more than 30-40% of their income for mortgages, taxes, utilities and maintenance.
  • 56% of citizens may be waiting till the next year for buying their homes and affordability concerns are driving this market trend.
  • 45% of Canadians are willing to wait for around 2 years even for making a purchase in more suitable market conditions.
  • 54% of buyers feel that home prices will come down in the future.
  • At the same time, 8 out of 10 citizens feel that a condo or home makes for a great investment.
  • Most citizens in Canada. feel that it is more sensible to buy a home as compared to renting.
  • Citizens are majorly prepared for any slump in home prices or a rise in rates of interest.
  • 21% of buyers are thinking of affordability levels while 20% wish to purchase in a secure and good locality.
  • Close to 47% of potential homebuyers will be making higher down payments and 74% of first time homebuyers are anxious about hikes in interest rates.
  • 56% of first timers are also considering possibilities of purchasing homes earlier due to worries of future interest rate hikes.

A few other tips to keep in mind

Undoubtedly, buying a home is a huge financial decision and you should certainly endeavour to get it right by all means. Here are some other tips for homebuyers to keep in mind:

  • Get expert advice regarding the locality, returns on investment and market scenario.
  • Do your homework regarding the properties that you can afford and overall mortgage to be repaid.
  • Consider your entire financial situation and plan accordingly without compromising on future goals.
  • The mortgage stress test is not always burdensome if you are buying in a less expensive city where sticker prices are on the lower side.
  • Your mortgage will be insured in case your down payment is lower than 20% of the purchase price for the home. The rates for payment will go up by up to 4% with the extra premium for insurance.
  • For people who have down payments exceeding 20% and mortgages which are not insured, the two percentage points will be added to the current rate as compared to the 5-year rate of the Bank of Canada. The interest rate worked out should meet the qualifying rate of the Bank of Canada or the rate contracted with the addition of two percentage points.
  • Aspects like debt, income and expenditure will be worked out through the stress test. Fixed rate mortgages have higher prices as compared to variable rate based mortgages. The latter may be a better option since fixed rate mortgages may affect overall options under the stress test paradigm.
  • Renewal of mortgages means that you have to pass the stress test and if you don’t, you have to fork out higher charges and stay with the same lender as well.
  • You can always retake the stress test if you don’t pass for the first time. When you try the next time, make sure you either have a higher down payment or an increase in income.
  • Affordability levels will go up in the future with several Government initiatives for first-time homebuyers and higher supply of more affordable housing units in the long run.

All in all, first time homebuyers should do their math carefully and buy when the time is right. It requires a little preparation in order to qualify for the mortgage stress test while also being aware of the localities where you can afford a home and whether they fit the needs of your family.