Newsletter - September 2019
Home prices are set to be flat for the rest of this year before picking up in 2020.
A panel of economists and analysts convened by Reuters says that lower mortgage rates and stable economic conditions will drive prices higher next year.
But homeowners and investors hoping for a new Canadian housing boom appear to be out of luck; the panel expects growth to be a modest 1.8% in 2020.
The strong labour market and population growth will be critical factors in next year’s price increases.
"There are views that the factors are in place for continued recovery, but then again it will be a slow recovery, not a sharp snapback," RBC’s senior economist Robert Hogue told Reuters.
Tale of two cities
Home prices in Toronto have already picked up and are now predicted to post a 2% gain for 2019 compared to a previous estimate from the panel of 1.3%.
However, prices in Vancouver are now expected to post a sharper decline in 2019 than previously thought; the panel believes a 5.5% decrease compared to the 4% they were predicting in May. There will be a modest rebound in 2020.
Demand for housing is expected to rise – 13 of the 17 on the panel said so with three calling for a hold-steady and 1 expecting a decrease.
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5 Things I Wish I Knew Before Buying My First Home
We know that the home buying process is daunting, and it might seem like you have a million tasks on your plate. Everyone is giving you advice, but what should you really spend your time worrying about? We asked a recent first-time homebuyer what she wishes she knew before she bought her home. Here are the 5 pieces of advice she thought were worth sharing.
Take Your Time With Mortgage Lenders
It’s no easy decision when debating over the many home lender options. First-time home buyers typically do the research themselves or use a loan officer, often referred by their real estate agent. Whichever route you decide works best for you, don’t be too hasty. Reading the fine print of every offer you receive is a must.
If you take the time to consider various lenders, you may find yourself in a position to negotiate the terms of your mortgage. A major first-time buyer consideration is that of Private Mortgage Insurance (PMI). If your down payment is less than 20% of the home sale price, then there is a very high chance most lenders will require a monthly PMI fee. By taking the time to shop around, you may have the opportunity to arrange a more favourable long-term agreement.
Pro tip: you can quickly compare different rates and lenders using RateHub.ca
Another type of loan to look out for are loans that recast. This means that your interest rate and loan term remain the same, but your monthly mortgage payment is reduced to reflect your actual current loan balance. Typically with these types of loans, lenders need an additional lump sum payment in order for recasting to work.
Everyone’s situation is unique. There are pros and cons to every loan. We aren’t financial advisors and you should always supplement our advice with a professional.
Budget For Unexpected Costs
This may sound obvious, but plenty of first-time buyers do not fully comprehend the amount of money that is spent before getting the keys to their future homes. While it’s essential to determine your future mortgage allowances, it is equally imperative to save an emergency fund. If your current living situation does not allow a month-to-month lease agreement or you find the home you can’t live without before your planned moving timeline, you will need a financial buffer. More often than not, buyers find themselves stuck between their current living expenses and those of their new mortgage agreement. Moving costs and the possible use of a storage facility can become very costly, even over a relatively short period. Buyers will also be responsible for paying all inspection fees for each home they intend to make an offer on. For direction on how much to set aside for these extra costs, speak with an experienced local real estate agent.
There Is No Such Thing As The "Perfect Home"
According to real estate mogul Barbara Corcoran, “Buyers decide in the first eight seconds of seeing a home if they’re interested in buying it.” While following your gut is important, too often new buyers tend to make rash judgments. Before starting your home search, brainstorm a very detailed list of deal-breakers. Is having a large yard a must? Are you only interested in homes with updated interior features? Do you require a minimum of 4 bedrooms and 2 bathrooms? Now narrow that list of must-haves down to the most important 3-4 features. This may take some serious flexibility. If you have the time and freedom to look at every available option, do it. We know this sounds daunting, but your earlier expectations may change during the house hunt. Sometimes it’s tough to find the home that has everything you ever dreamed of — in the ideal price point — in the perfect area of town.
It might be impossible to find a home that checks off all of the boxes upfront. But as time goes on, you can check the rest of the boxes off.
Always Consider Return On Investment
It’s relatively easy to factor which type of home and location suits your current lifestyle needs. A townhouse or an apartment may offer a cheaper mortgage upfront… it might even within walking distance to your favourite coffee shop or gym! While these are all things to consider, do not lose sight of the long-term investment. If and when you decide to rent or sell your first home, it is extremely valuable to consider your future buyer. One key factor to consider is the area’s school district. Would your home be attractive to a family? If the answer is yes, there is a good chance you’ll have a more successful selling experience when the time comes.
Pay Close Attention To The Home Inspection
Once you’ve chosen the home you want to make an offer on, and the seller has agreed to terms, you will need to hire a licensed home inspector (or sometimes multiple home inspectors) to evaluate the home’s condition. Keep this in mind: no home, no matter the age, is in perfect condition.
A good inspector will point out all the issues about the four main inspection points: HVAC, electrical wiring/panels, plumbing, and roofing. These four areas of concern will directly affect your home insurance coverage and more costly short and long-term repairs. The status of the inspection report will also play a role in the negotiation process between the buyer and seller. An experienced realtor will know exactly how to advise your next steps.
While not every scenario is highlighted here we are happy to answer any questions you have during your home buying experience. We even have a well-rounded list of vendors if you are in need of a referral.
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Need help navigating the Real Estate Market?
Contact THE 905 REAL ESTATE GUYS
We are here to help!
Sean Kavanagh 905.220.9198
Leo Manchisi 905-334-9650