One question sure to be on the minds of many Canadians right now is whether or not they will be able to afford to buy a home in the near future.
With many views floating around about the housing market and the current soaring home prices, perhaps the real question is whether or not the housing market is going to see a drop in prices anytime soon??
While many may speculate that this is not the case and that they may not be able to buy a home at least for the foreseeable future, 2017 may just be the year that house price increases finally slow down – presenting a more positive perspective on overall housing affordability.
With that being said, let’s take a look here at just how easy it is to buy a home in Canada these days!
As mentioned, many experts moving forward do see the housing marking slowing down perhaps due to a variety of reasons, one of course being the stricter mortgage regulations introduced in recent months.
In addition to these new Canadian mortgage rules, reduced sales activity in the housing market may also lead to lower overall demand. Therefore, with less demand, home sales activity levels may in turn decrease. Moreover, many housing market experts are also suggesting that this could lead to a dip – or at least a slow down in the rate at which house prices are climbing across Canada. With that being said, it is important to mention that this may not be the case for all areas.
As per the CREA (Canadian Real Estate Association), home sales in provinces such as B.C., Ontario, Saskatchewan, Nova Scotia, Newfoundland/Labrador and Prince Edward Island may be poised for lower home sales activity. On the other hand, they are predicting that house prices may not decline in regions like Alberta, Quebec, Manitoba and New Brunswick, with higher to moderate price increases across these areas in 2017.
While some Canadian some buyers as a result may feel negatively about the whole home buying process these days, there may still be many positive reasons for doing so. As mentioned, the slow down in prices id expected to arrive sometime in 2017, in a wide range of Canadian provinces, and this might just present a window of time where home buyers can benefit.
With the mortgage rules being adjusted to help borrowers curtail their debt and reduce the ease at which borrowers can access higher levels of credit, this may actually set home buyers up for more successful home loan management overall. While home buyers may have a few more hurdles to go through in securing their mortgage, it does mean that individuals will be required to more thoroughly consider the expenses associated with becoming a home owner, therefore taking better, more stable steps to achieve this goal.
For first time home buyers, these rules are even more likely to impact them, as they may be forced to readjust their thinking when it comes to what they can afford. This reality should not however, be seen as a negative thing, as they may instead focus more on affordability compared to before these new rules were introduced. Ultimately, however, buying a home in 2017 should be more obtainable as long as they alter their expectations with regards to the size of mortgage they are able to secure.
While some lenders may have slightly increased interest rates on certain mortgage products, rates still remain historically low. As a result, Canadian home buyers should continue to benefit from this in 2017.
Following along the lines of the mortgage rules and the way they are aiming to promote more responsible lending and borrowing from here on out, home buyers can also do themselves a favour by entering into the home ownership arena with a clear view of all of the expenses associated with buying a home.
By doing so, they can also aim to set themselves up for more manageable home ownership and mortgage repayment by being prepared and of course taking the time to make sure they have enough funds to move forwards successfully.
Doing some research to uncover all of these areas is a good first step before you even approach a lender for a mortgage. Here are some important costs associated with buying a home:
The down payment (5% for properties under $500, 000, 10% for additional price of home exceeding this amount)
The mortgage (new rules, including stress test on higher-ratio mortgages)
Land Transfer Tax
Property Tax
Condo Fees
Maintenance/Repairs/Renovation expenses
Especially for first-time buyers, there are also certain ‘hidden expenses’ that they might not otherwise have known about. These include:
Moving Expenses
Home Insurance
Property appraisal fees
Home inspection fees
Charges for setting up utilities
While these expenses may seem daunting, it is however best to be aware of them, so that individuals are not caught off guard by the true cost of buying a home. Planning ahead and budgeting for these expenses will help any potential home buyer when it comes to being able to afford their new home.
Overall, having a clearer perspective on how much this entire process is likely to cost you, as well as readjusting your parameters for the size of mortgage you are able to obtain, can also encourage more responsible home loan management over time.
In the end, while the new mortgage rules and the current status of the Canadian housing market may be a bit deflating for you when it comes to your home ownership goals, these realities however do have the potential of leading towards a more positive outcome for many home buyers in Canada over the course of this next year.
