Monday, April 15, 2019

Yes, you can be a homeowner

The news is full of negatives about housing market slowdowns, mortgage stress tests that shut millennials out of homeownership, low inventory, a slowing economy – it goes on. Although it may seem gloomy to many, there are a few silver linings. The Canadian dream of homeownership is still alive, although it may look a bit different than the traditional idea of owning a home.

First of all, the make-up of home buyers has seen a distinct change from the more traditional trend of buying with a partner/spouse. According to the recent RBC Home Ownership Poll, 28% of those polled say they need help and are purchasing or planning to purchase with their family. That is almost as many as those who say they can purchase alone (32%).

When compared to past years, buying a home with a partner or spouse has been steadily declining (42% versus 49% in 2017), while non-traditional trends, like purchasing a home alone (32% versus 29% in 2017), are climbing.

It’s also clear that what’s happening in today’s market is having an impact on buyers with 56% of Canadians thinking it's better to wait until next year to purchase a home. Almost half  of those are prepared to push the purchase out two years or more (highest among 18-34-year olds, 55%). Of those waiting to buy, 54% have the expectation that house prices will come down (as high as 68% of British Columbians and 58% of Ontarians expect the price of housing to drop).

Here are some highlights in the poll:

  • Canadians feel it makes more sense to buy than rent (66%).
  • Canadians are well positioned to weather a potential downturn in housing prices (71%) or an increase in interest rates (63%).
  • Affordability (21%) and being in a safe neighbourhood (20%) top the list of what Canadians must have, while buying in 'the right' neighbourhood is less of a concern (6%, steady decline since 2015).
  • Canadians are most willing to sacrifice the conveniences of being close to a major highway (16%), dining and entertainment (13%), good schools (11%) and public transit (10%).

A new housing reality

In the poll, eight-in-10 Canadians say a home or condominium purchase is still a good investment (81%). When we look at the condo market, there is a lot happening. This year, a record number of condos are set for completion in the GTA, which will likely slow price growth.

The Canadian Real Estate Association (CREA), in its most recent forecast said it expects the monthly trend for sales to improve slowly over 2019. Low interest rates and a strong job market is positive, with pricing projected to stabilize over the next two years, except in markets where there is a shortage of supply.

Non-traditional housing and co-owning arrangements are popping up across the country. The focus is on community is the key to cohousing projects that generally consist of individual homes, built around a common house with shared amenities. These amenities generally contain a kitchen and dining room and can have anything from kids’ playrooms and workshops to guest rooms and gardens.

Get ready

While it’s true that government policies have made it harder for some to qualify, the new ‘shared equity program’ and the RRSP withdrawal increase may help some of those people. 

As we head into the Spring market, listings will start to increase as buyers and sellers come out of hibernation. It’s important for homebuyers to educate themselves about mortgages, including how to qualify in this new stress-test environment. Working with a TMG mortgage professional will help you navigate the ins and outs of the mortgage process, from qualifying to approval and through to closing.

If you don’t qualify right now, your mortgage professional will show you ways to increase your likelihood of qualifying in the future.

Yes, you can fulfill your dream of homeownership.

Why a mortgage professional?

By working with a licensed mortgage professional, you have a trusted adviser and problem solver. Brokers take the time to first understand a client’s needs, both short term and long term, then recommend the right mortgage and present options. In addition to straight home purchases, brokers work with clients who refinance to consolidate debt, who are looking to purchase second homes, who are looking for the best options at renewal time, and brokers help clients make property-related investment decisions.

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