The real estate market has become one of the main drivers of the Canadian economy, especially in bigger cities like Toronto and Vancouver, but the rest of Canada is also not lagging far behind. According to statistics, the real estate business along with housing construction makes up for 15.5% of the GDP meanwhile. The year 2017 was the year of many changes in the real estate market which were introduced to keep the market under control and prevent a potential housing bubble that could eventually lead to a market crash. All of that also reflects on common people who are trying to sell their home or find a new home. If you are about to re-enter the real estate market after a long while, either as a buyer or seller, there are several things you should know about the market conditions today.
What Has Changed?
The first thing you will probably notice is that prices went up, and they still keep climbing at incredible speed. For example, looking back to several years ago in Calgary, a family house was between $445,000 and $446,000 on average in 2010, whereby nowadays, the average house price is around $555,000 according to the latest 2017 data for the town. This is good news for potential sellers who should look up the average prices in their area and price their house right. Calgary sellers should also know that it is normal for a home to be on the market for up to 60 days. They should not lose their cool if the home does not sell in the first month since sales have dropped by somewhat more than 6% in the city compared to last year. Buyers, on the other hand, probably have to spend less due to price decreases. The next thing that affects them is the different government measures that have been introduced lately. Let’s start with last year’s revised mortgage regulation which made it harder for homebuyers to obtain a loan. If they cannot come up with at least 20% of the total home price as a down payment, then, the buyer needs mortgage insurance such as CMHC. This regulation also restricted the eligibility criteria, so maybe you will not qualify for the same price range as before when it comes to getting a loan. The latest big event was the interest rate increase in mid-July this year. The interest rate has been record-low since 2010. It went up by 0.25% after seven years and stands now at 0.75%. You may think that it is not much in terms of monthly annuity, but this increase is only the icebreaker for further increase. The next one is already planned in October, and it is not known by how much it will rise this time. If you are thinking about buying a property, you should follow the motto the sooner, the better. Get a mortgage broker to lock in the current rates for 90 to 120 days.
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