The Canadian housing market has been a hot topic of discussion for some time now. After the housing boom in 2021 that saw house prices increase dramatically and homes selling in as little as a few days, there has been the start of a balance in the market. As well, with the rising interest rates at the end of 2022, it seems as though the real estate market is constantly changing.

Additionally, Many Canadians are seeing their monthly expenses rise as inflation continues to increase across the country. As expenses and interest rates rise, national home sales and general market activity have decreased since the beginning of 2022.

With housing prices rising steadily in many cities across the country, the question of whether now is a good time to buy a house in Canada has become an increasingly pressing one. In this article, we will explore the factors that should be considered when making this important decision, such as the current economic climate and market conditions, the availability of mortgages, and the potential risks and rewards of investing in Canada’s housing market.

Current Economic Climate

The current state of the economy in Canada is one of the most important factors to consider when deciding whether or not to purchase a house. With the country’s economy slowly recovering from the pandemic, it is important to consider the potential impact on the housing market.

Higher interest rates have been one of the biggest influences on almost everyone’s financial situation. The Bank of Canada had kept the overnight rate at 0.25%, which is a historic low, and had indicated that it will remain there until at least 2023. However, at the end of 2022, many rate hikes were announced which has pushed this rate to sit at a high of 4.25%. The interest rates increase will directly influence home buyers and can make buying a house slightly higher, especially when it comes to your mortgage rate.

As home sales and the monthly activity in the housing industry started to slow, we could see these high-interest rates and home prices fall throughout 2023. As home buyers, you will want to monitor the average house prices and interest rates on new listings before purchasing a property.

Mortgage Availability

One key aspect of the current economic climate that directly relates to Canadian real estate is fixed or variable mortgage rates and availability.

As the cost of living increases and other interest rates rise, mortgage lenders are increasing their criteria for people looking to buy a house, making it more difficult for some potential buyers to qualify or get pre-approved for a home loan.

With high home prices, the down payment and regular mortgage payments will be quite high and can be hard for some home buyers to stay on top of. Because lenders want to make their money back, they want to guarantee that individuals can afford to make these payments on time when buying a house.

It is important to research the different mortgage options available and to speak to a financial advisor or real estate expert to ensure that you are able to get the best deal possible.

Risks and Rewards

When considering whether or not to purchase a house in Canada, it is important to consider both the risks and rewards of investing in the Canadian housing market. Outside of the state of the market and mortgage availability, there will be risks and rewards to every real estate transaction.

While purchasing a home or investment property will allow you to start building equity and make some money off rental income, it will also mean paying property taxes, dealing with tenants, and staying on top of potentially high monthly payments.

As well, there is always the risk that your home’s value will decrease over time as the economy changes. But, on the flip side, you may be able to sell the property for more money than you purchased it at if the market booms as it did in 2021.

Location and Timing

The location of the house is also an important factor to consider. In some cities, such as Toronto and Vancouver, the housing market has been particularly volatile, with prices rising quickly and then falling just as quickly. It is important to research the local market carefully and to ensure that you are investing in a location that has the potential for long-term growth.

The national average home price in October 2022 was sitting at $644,643. Other provincial average house prices included in the Canadian Real Estate Association (CREA) report includes :

• British Columbia : $904,020
• Alberta : $422,709
• Saskatchewan : $321,000
• Manitoba : $330,742
• Ontario : $829,934
• Quebec : $479,787
• New Brunswick : $269,800
• Newfoundland/Labrador : $280,200
• Nova Scotia : $368,600
• Prince Edward Island : $355,000
• Yukon : $498,567
• Northwest Territories : $392,255

The location can have quite an impact on prices and mortgage rates as some provinces have a lower average home price than others, even though the national average price is over $600,000.

The timing of when you purchase real estate is also an important factor. Depending on the state of the economy and the housing supply, you may be trying to buy a house in a seller’s market. This is when the inventory of housing available for sale is lower than the demand. This allows sellers to raise home prices as demand increases.

If you purchase a house during this time, you may end up with larger monthly mortgage payments or higher fixed mortgage rates than if you had bought at another time and with a lower interest rate.

Although it is possible to find a fair price and purchase property in the current market, it is important to be aware of the potential for prices to rise in the future. If you are able to wait for prices and inflation or interest rates to drop or until a buyer’s market, it may be possible to get a better deal.

Down Payment

The size of the down payment is another important factor to consider. Although it is possible to get mortgages with low down payments, it is important to ensure that you are able to cover any additional costs, such as closing costs and moving expenses.

When you plan on buying a house, it will be important to talk with your bank about the home’s price and interest rates. Planning with a financial institution can help first-time homebuyers manage the expected payments in home ownership and plan for their down payment and their home purchase.

Conclusion
Purchasing a house in Canada is an important decision and one that should not be taken lightly. By considering the various factors involved, it is possible to make an informed decision about whether or not now is a good time to buy a house in Canada.

Is It A Good Time to Buy A House in Canada? by Helana Mulder | Canadian Real Estate Wealth