September 2022

All posts from September 2022

How The Average Canadian is Coping with The Plummet in Housing Affordability

by Bevony on September 22, 2022 No comments

Research shows home prices are at their least affordable in the past three decades. New buyers are facing a number of challenges, one of which is affordability. For many, it is a race to try and keep up with home prices. A race they are losing as home prices continue to increase. 

Property values have seen a notable drop in our market and many other markets year to date. But prices are still higher than their pre-COVID levels. The onset of the pandemic caused a housing market boom in Canada. 

In August 2022, the Housing Affordability Index showed that Canadians had less affordable homes available to them. The available numbers were fewer than at any point in the last 30 years. Many Canadians are now left with the sad reality that owning a home is now out of their reach.  

The National Bank noted in August that Canada was seeing its “worst deterioration” in affordability in 41 years. This was for the second quarter of this year alone. This was the sixth successive quarterly decline. The National Bank further indicated that on average 63.9% of income was necessary to maintain a mortgage. This level has only been seen in 1982 prior to now.  We can blame rising internet rates for this. This further caused a significant slowdown in the market, causing home prices to slide below 12.8%. 

Vancouver was among the cities to witness the biggest deterioration in the second quarter. The most modest declines were registered by Calgary and Quebec. 

What to Expect 

The National Bank noted that with home prices falling and with the five year mortgage rate being stabilized, affordability could improve as we close out 2022. 

Robert Hogue, economist at the Royal Bank of Canada, predicted that home prices are likely to hit their lowest in spring. We expect to see the most significant price declines in Ontario and British Columbia. 

What HomeBuyers are Doing 

Many homebuyers are now seeking co-signers for their mortgages. While this is an unconventional method, it has gotten popular with the affordability challenges that people are facing. While it may not be fun for you to ask a parent or friend to co-sign, it is what can help you get into the housing market, and that for many is worth it. 

Cosigning is also beneficial to the lender as they reduce their risk because they are loaning to you a first time homebuyer so if you run into difficulties paying you have the option of the co-signer stepping in to make those payments for you. The lender has the additional security with a co-signer that can boost your chances of getting the loan. 

As a matter of fact, the Canadian Imperial Bank of Commerce revealed that close to the end of last year 30% of new buyers had help from a family member or friend when purchasing their home. We see gifted amounts increasing as the prices in the market surged up. ⅔ of new buyers received a financial gift to add to their principal source of funds. In fact, over $10 billion was provided in gift payments, according to one report from the CIBC. The report also indicated that 5% of the relatives doing gift payments were doing so through debt and for the most expensive markets in Toronto and Vancouver. 

Other Options for First HomeBuyers

If you feel like you have been priced out of the market and have no options for owning a home. Don’t give up just yet. Contact us here at SilverBeam Homes and let us help you see through the possibility of building your home from the ground up.  

When you work with us, you can build a customized home that specifically meets your needs, and we work with you to stay on and under budget while giving you the best home to move into. If the market is currently giving you the blues, all hope is not lost. Call us and let us talk

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BevonyHow The Average Canadian is Coping with The Plummet in Housing Affordability

Predictions for Canada’s Housing Market in the Next 12 Months

by Bevony on September 12, 2022 No comments

The housing market in Canada continues to surprise us for both buyers and sellers. Buyers have seen the highest prices and have heard about price corrections for home prices. But have we seen this? Is it possible that the new year will bring a change for you, so you can get your home?

Right now, the truth is, understanding the housing market is hard. But we can start prepping for the next year by thinking about some things. Supply is always a big factor in home prices, and sellers are nervous about what kind of returns they will be seeing for their assets. As such, some will hold off listing their homes when they can. 

Sellers never want to sell in a low market. But it is usually during this time that buyers are out in abundance. Included in this group are resellers. This would be the opposite of what we saw this past February. What this could mean is low housing prices all across Canada, which would drastically impact supply in a negative way. 

For Buyers 

First time buyers are frustrated, as there aren’t many potential homes on the market for them. Many of the houses currently going on the market have had the same owners for over 30 years, so buyers can see their budgets disappear, especially if they need renovations. Often potential buyers find something, but when they see the work that is required, they find themselves running into difficulties because their lender may not be able to finance and insure the property. 

For Seller’s

Sellers may be feeling less frustration than buyers, but that is until their properties are not selling. We can expect to see a shift in what it means to own property. Families are selling off their assets, and new generations are taking action towards homeownership. In the current housing market, there is really no perfect time to make a move. 

Those looking to sell need to find and work with an agent who can help them develop a strategy for bringing a home to market. They should put you on with a clear vision on the values for your area, and let you know of any barriers that may be present to make your property more desirable, as well as what could make it less desirable, so you can avoid that. 

Buyers may need to take a look at their options outside of buying a home. One option could be to build a home with us. Contact us to find out more about building your dream home from the ground up. 

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BevonyPredictions for Canada’s Housing Market in the Next 12 Months

House Prices Decline in 2023

by Bevony on September 5, 2022 Comments Off on House Prices Decline in 2023

The soaring house prices we are currently facing are expected to drop sharply next year. But this price drop may still not make houses affordable since the Bank of Canada keeps raising interest rates. 

Near zero interest rates and already high prices in one of the hottest housing markets in the world will fuel the decline in prices. Average prices have risen this year by 10.3% but this is slower than the pace of the previous which was 11%. 

The hike in interest rates brought on by the bank of Canada in March has caused a 6% decline in prices. But it is expected to take years for affordability to set in. In 2023 we are expecting the average house prices to drop by 7.8%. This is a significant drop since the last prediction three months ago was 2.2%. If we actually see this decline, it will be the biggest decline since 2005. 

Price Drops Expected in Different Cities

The forecast for Vancouver and Toronto  predicts prices will drop by 7.3% and 8.5% respectively. While the pandemic is not over, the pandemic-era of the housing market boom is. The bottom is likely months away. 

The 100 basis point rate hike by the Bank of Canada on the 13th of July disqualified buyers from getting a mortgage. We expect the next two rate announcements to continue to cool things down. The only thing not cooling down is consumer price inflation. It is expected to remain high for some time reaching an almost 40 year high in June of 2022. 

The Disconnect Between Home Prices and Income

Home prices have been far disconnected from rent and income for quite a while. Even if there was a benchmark fall of 30% across the nation the pre-COVID prices which were not even affordable to begin with is where we would end up. But now, buyers are faced with higher interest rates than those of 2020. 

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BevonyHouse Prices Decline in 2023