According to the Canadian Real Estate Association, the Spring market is anticipating a drop in home prices edging down approximately 6% from 2022, putting the average home price at $662,103 in 2023. The downward trend stems from rising interest rates and continued uncertainty in the marketplace.
In some cases, sellers have taken their homes off the market in the hopes that prices will rise again; meanwhile, potential buyers are biding their time for interest rates to drop. Due to this, home prices may continue to see reductions throughout 2023, while interest rates are not expected to drop until 2024 or later.
While not a particularly buyer-heavy market, there are still individuals who will be looking to make a move, upgrade/downgrade or simply relocate.
For those households who think they are on the purchasing end of the Spring market this season, here are five signs to know if you’re ready:
- Your income is stable: For most first-time home buyers, purchasing a house indicates that you can make regular payments to service a mortgage. Accordingly, you should make sure you have a secure and steady flow of income to make these payments over the length of your home loan period. While this is often thought to mean that you work a full-time job, many self-employed Canadians also have stable incomes – and alternative lenders, are willing to listen to their unique financial situations.
- You are ready with your down payment: Having enough money on hand for a down payment is important because the amount will impact the type of house you can buy, the amount you need to borrow and the range of financing options you qualify for.
- You found an area you can grow in: Buying a house means putting down roots, so you need to make sure that you can buy a house in an area that suits your needs and lifestyle. You should also be able to envision yourself living in that area over the next five to 10 years.
- You feel comfortable managing your debt: Paying for a house involves having the discipline and commitment to stick to a budget. Take some time to track your spending habits over a couple of months to find out if you are comfortable setting aside roughly 30% of your income to pay for your mortgage debt.
- You have an emergency fund on hand: Owning a home means that unexpected home maintenance expenses, such as plumbing and electrical repairs, could eat into your budget. So having an emergency fund on hand to cover six months’ worth of expenses will allow you to cover these unforeseen costs.
If you feel that these signs point to ‘yes’ or you have more questions about purchasing (or selling) a home this Spring, don’t hesitate to reach out to Sam or his team directly for expert mortgage advice! [email protected]