The housing market has not slowed down in 2020, even with COVID-19 causing disruptions in other businesses. During the 3rd quarter of that year, sales in Canada only decreased two percent, and that was due to underwriting changes.
Needless to say, realtors are looking at positive numbers for 2021. However, those could change at any moment. For those who are looking to buy a home, it means they need to be prepared for anything.
Here are a few things you must know when buying a home in the new year.
The Bubble Doesn’t Seem Ready To Burst
Housing prices continue to climb. For instance, new home sales in Edmonton have gone up by eight percent from 2019 and two percent from September of 2020. Though you do get more for your money from builders like Sterling Homes, it can still be out of some buyers’ budget ranges.
Having said this, real estate experts believe a drop in home prices is bound to happen in 2021. Some have predicted they’ll decrease as much as seven percent due to a few issues. A glut of new homes in Calgary and product losses in the Alberta oil fields are two examples.
Thus, you need to plan accordingly. Make sure you have enough money saved to get a pre-approved loan. Check your debt-to-income ratio and see if any changes need to be made. Additionally, review your credit report. Dispute any records that aren’t correct.
Interest Rates Will Probably Remain Low
Canada will probably follow its neighbor to the south and maintain interest rates that are some of the lowest in years. Since the economy is still recovering from the pandemic, raising rates for home loans would be counterproductive. This is a boon for home buyers.
Average rates for a 30-year mortgage hover around 2.5 percent. Of course, this is if your income and credit are good. Those who don’t have as much to provide may encounter higher rates.
More Affordable Housing Units
In September of 2020, the government of Canada released one billion dollars for a Rapid Housing Initiative (RHI). The goal of the RHI is to create 3,000 affordable modular housing units. These will be available to low-income families in 2021.
This is good news for those who haven’t been able to afford a home in the past. As home prices increased wages remained the same or decreased. As a result, families were pulled further away from the market. Now, there’s an opportunity to move forward and establish a foothold in a new neighborhood.
Migration From The City To Suburbs
The congestion of cities like Toronto and Montreal put people in a panic during the coronavirus pandemic. At the start, urban regions had a higher rate of COVID infections than suburban areas. It has made some city residence think about their future living plans.
As a result, more people are migrating to the nearby bedroom communities of these cities. The initial bad news is there’s bound to be a housing crunch in some larger metropolitan areas. The good news is it provides initiatives to home builders to increase construction times in new areas. While the first half of the year might be tough, the market could loosen up in the summer.
Moves From the Suburbs to Rural Areas
As city-dwellers move to the suburbs, residents of these areas feel the pinch of overcrowding and the coronavirus. In turn, they’ve decided to leave these designed communities for homes in more rural areas.
There are advantages to this. First, standalone homes or those in small developments tend not to be subject to the rigors of suburban HOAs. Second, housing prices are lower. The downside is those who move to these areas don’t have the access to the necessities they once had.
In summary, the housing market in 2021 looks as crazy as the one in 2020. Therefore, don’t pull the buying cord when the clock strikes midnight on the first of January. Review your finances and the area where you want to purchase a home. Weigh the pros and cons of new construction and residences in established neighborhoods. On top of this, determine if you want to leave the suburbs and try for a home in a rural area.