There has been a lot of uncertainty among homebuyers when it comes to pulling the trigger on purchasing a home. Many have been waiting for the Bank of Canada to drop interest rates further, for potential trade and tariff concerns to settle, or for affordability to improve.
Navigating the real estate market at this time can be confusing, but there are legitimately good reasons to buy now if you’re financially able. Here’s why.
A Buyer’s Market
In many markets across the country, it’s buyers who currently have the advantage. In Ontario, many areas have greater supply than demand, especially in Toronto, where there is a surplus of condos and little demand for them. There is a lack of push to rush through deals, so buyers also have time to negotiate a better offer. However, the same cannot be said for every province. Areas like Saskatchewan and Winnipeg have a tighter supply and demand, causing prices in those markets to continue to rise.
Lower prices are also causing more buyers to emerge from the sidelines. The Canadian Real Estate Association (CREA) states that the average price of a home in Canada dropped by almost $150,000 between February 2022 and July of this year.
Interest rates have also been steadily declining. The Bank of Canada has recently lowered its key interest rate by 25 basis points from 2.75 per cent to 2.5 per cent. Compare this to April 2024 when interest rates were at 5.0 per cent.
All these factors have been steadily increasing market activity. CREA’s recent National Statistics report states that this past August was the best month of August for sales since 2021. It also marks the fifth straight monthly increase in activity, making for a cumulative 12.5% since March.
Should You Buy Now?
Reasons to Buy
- Locking in stability now before prices rise again could secure your footing in the housing market before it’s too late.
- The majority of Canadians consider their homes to be a good long-term investment, as owning a home can hedge against inflation.
- With supply outpacing demand in many markets, buyers have time to negotiate good terms and wait for the right deal.
- If you’re a first-time homebuyer who has been renting and are now able to buy, purchasing a home will allow you to build equity instead of paying rent.
Reasons to Wait
There are, of course, always reasons to wait:
- Depending on where you’re looking to buy, market conditions may still be tight.
- Even with the Bank of Canada cutting rates, mortgage rates are still much higher than they were pre-pandemic. If you choose a variable rate, there’s no certainty that rates will remain stable.
- Uncertainty regarding other economic factors like a potential trade war have many buyers feeling nervous.
- Lending guidelines could always become stricter again, making the barrier to qualifying even more difficult.
If You Are Ready to Buy
If you think it’s the right time for you to enter the market, making sure you have all your ducks in a row can make the process smoother and ensure stability down the line.
Savings & income: Having a stable income and solid down payment is your first step to buying a home. You’ll also want to have a separate emergency fund ready, ideally 3-6 months’ worth of savings.
Shop for quotes: Most Canadians stay loyal to their bank when shopping for a mortgage quote, but checking different rates from different banks can save you money. Read more in our article on Shopping for Mortgage Quotes.
Be strategic: It’s easy to get swept up in emotions when house shopping, but keep your eyes out for the things that matter. Be strategic about your location, budget, and foundational elements of the homes you’re looking at.
Be patient: Depending on where you’re buying, you may be looking at a market that will allow you time to shop and negotiate. Don’t make any rash decisions, but don’t wait too long either.
Check out our articles on First-Time Homebuyer Mistakes to Avoid for some extra tips.
