Thinking about buying real estate in Victoria? While some might suggest waiting a year or two for housing prices to come down, now might be a good time to start looking. The quarterly report on Vancouver’s housing market indicates while prices are starting to come down, inventory is high. So, should buyers test the waters or wait and face stiffer competition?
The Decision to Buy or Wait
Based on the Canada Mortgage and Housing Corporation (CMHC), real estate prices have dropped by about seven to eight percent from last June.
“This housing market assessment is an early warning system for vulnerabilities in the housing market. The degree of imbalance between home prices and the local economy is narrower than it has been at any point in the last several years.” That’s from CMHC market analyst Eric Bond.
There’s Still Some Potential Risk
While house prices are coming down in Vancouver, house affordability hasn’t eased that much. In Victoria, to afford a house priced at $741,000 a potential home buyer would need to make $140,000.
Here’s how it looks in other cities:
- Vancouver: House price: $1,441,000. Household Income needed: $240,000
- Toronto: House price: $873,100. Household Income needed: $160,000
- Victoria: House price: $741,000. Household Income needed: $140,000
- Hamilton: House price: $630,000. Household Income needed: $120,000
- Kitchener-Waterloo: House price: $523,720. Household Income needed: $110,000
- Calgary: House price: $467,600. Household Income needed: $100,000.
- Ottawa-Gatineau: House price: $444,500. Household Income needed: $90,000
- London: House price: $426,236. Household Income needed: $90,000
- Montreal: House price: $375,000. Household Income needed: $80,000
- Edmonton: House price: $372,100. Household Income needed: $80,000
- Saskatoon: House price: $301,900. Household Income needed: $70,000
- Regina: House price: $275,900. Household Income needed: $70,000
Source: RateSuperMarket.ca article, Less Than 10 Percent of Canadians Could Buy a House in Toronto.
Another reason buyers are holding off now is they know when buying at a higher price, rates or unemployment can increase. Or, what if there’s some other macro-economic shock? The determining factor for buyers is also based on how much they borrow and how much they’re putting down as a down payment. Some may delay buying so they can increase their downpayment, and therefore their buying power.
Finding Affordable Homes in Victoria
In exploring where potential buyers can find affordable properties, one option is to widen their search. While some may choose to wait another year or two for prices to come down further, depending on where buyers shop, there might be a bigger selection now.
“In many ways this is an opportunity for them to explore more options, and also to take their time making a purchase and putting reasonable conditions on that offer,” Bond stated.
The expectation is that buyers can now make offers without having to worry about unrealistic bidding wars. In the past, some buyers were submitting offers without conditions for financing or home inspection. As the market turns, Bond expects buyers will be able to once again insert those clauses. Reasonable conditions might include a provision for a longer closing period, making a purchase dependent on acceptable financing, and including the need for a thorough property inspection.
Other Options for Potential Buyers
Potential buyers can use tools to help in their searches and they should explore programs the government offers.
Tools for buyers include:
- Online Mortgage Rate Comparison Tool: Using an online mortgage rate comparison tool can help potential buyers find the best mortgage rates. They can select their area and pick from Canada’s leading lenders. Then, contact the lender to lock in rates.
- Mortgage Payment Calculator: A mortgage payment calculator can help with determining what a future monthly mortgage payment will come out to.
- Mortgage Affordability Calculator: Another helpful tool is a mortgage affordability calculator. This can help a potential homebuyer determine “how much” house they can afford. They can enter items like salary, any debts and how much they have for their down payment.
- GST or HST Housing Rebate: Canadians can use this towards the purchase of a home or renovations to a home.
- First-Time Home Buying Incentive: Look into the federal government’s First-Time Home Buying Incentive (FTHBI). It takes effect on September 2 and is for first-time home buyers making up to $120,000. The incentive provides 5 percent for existing homes and 10 percent for new homes. Buyers have 25 years to repay the loan, or it is paid back when the property is sold.
- The RRSP Home Buyers Plan: Canadians can now take out $35,000 instead of $25,000 for their homes. Repayment is within fifteen years.
As housing prices continue to cool down, conditions are improving for potential buyers. Now might be a good time to start looking at real estate. You can find the best rates and apply for a mortgage in Victoria today on RateSupermarket.ca.