With both inflation and interest rates continuing to drop, more and more Canadians are making plans that include the possibility of buying a home.
If becoming a homeowner is on your radar this year, there are a few things you should know before you start looking for your dream home.
Will 2025 be a good time to buy a home?
For the past few years, high interest rates, increases in the cost of living, and political and economic worries have kept Canada’s housing market fairly flat. But with both mortgage rates and inflation now on their way down, 2025 is increasingly shaping up to be a busy market.
In addition, there will likely be a federal election in 2025, which could impact both home sales and prices.
“As we’ve seen in the past, federal elections can influence the housing markets, especially if they involve policy changes that promote affordability and impact demand and prices,” says Luisa Hough, a mortgage broker in Surrey, British Columbia, and co-founder of Verico Xeva Mortgage.
“But along with declining inflation, the predictions are to expect economic stabilization in 2025.”
Are you ready to become a homeowner?
The next question to ask yourself is whether you’re ready to become a homeowner. While individual circumstances vary, there are a few rules of thumb that can help you decide if this is the right time for you:
• Are you ready to commit to living in one home for the next few years?
• Are your career and short-term plans fairly stable?
• Are you ready to take care of all the extra bills?
• Are you financially ready to own a home?
“When a buyer is thinking about buying a new home, their decision should be based solely upon their needs,” REALTOR® Romey Halabi, founder of Toronto Realty Boutique in Toronto, Ontario, says. “An expanding family, marriage, moving to a new city, getting into a new school district — these are all life moments that may require a new home.”
For Hough, the “right time to buy” is less about what’s happening in the market, and more about your personal choices and circumstances.
“If you have the down payment, income, and are ready to make the move to being a homeowner, then it’s the right time to buy,” she says. “We can’t time any market. So as long as you’re in the position to purchase, the right time is when you’re ready.
“Real estate is generally not a short-term investment where you can try and time the market for one or two years. But if you stay invested in real estate long term, you can generally do well.”
When to contact a REALTOR®
If you’ve resolved to become a homeowner this year, start your search for a local REALTOR® who will work best for you and your needs as early in the process as possible.
“It’s never too early to start working with a REALTOR®,” Halabi says. “They’re the first draft in your real estate team, as they can help connect you with a mortgage broker, lawyer, and anyone else you need.”
In addition to connecting you with their network of professionals, a REALTOR® can also answer any questions you may have, keep you informed about the latest ups and downs in the market, walk you through each step in the home buying process, and help you negotiate the best possible price for your new home.
If you don’t already have a REALTOR®, ask friends or family members for recommendations, or check out reviews of REALTORS® in your area online and through social media. You can also use the Find a REALTOR® tool at www.winnipegregionalrealestatenews.com to narrow your search down by languages spoken and areas of specialization.
“Getting the conversation going with a REALTOR® is the first step in educating yourself in how the process works” Halabi says. “Work with someone you actually like, because you’re going to be spending a lot of time together, and you want to ensure you’re comfortable being honest.”
What to do before you buy
If you decide you’re ready to buy, here are a few simple things you can do to make the home buying process as seamless as possible:
• Make a list of your wants and needs in a home, so you know exactly what to look for.
• Identify neighbourhoods you want to live in.
• Find out your credit score, and see what you can do to improve it if necessary.
• Use an affordability calculator to figure out how much you can afford to spend on a home, and create a budget to make sure you stay on track.
• Get pre-approved or pre-qualified for a mortgage so you’ll know exactly what price range you can afford.
• Lastly, find out if you’re eligible for the Home Buyers’ Plan (HBP), GST/HST housing rebate, home buyers’ tax credit, or any other federal home buying programs and incentives.
“In my eyes, every buyer must get pre-qualified,” Hough says. “There’s a misconception on pre-approval vs. pre-qualification. There are similarities in both… [but] pre-qualification is a more formal process, where we ask for all the documentation and information upfront. Pre-qualification helps the borrower clarify their budget, strengthen their offer and speed up the subject-to-financing process.”
Maximize your down payment
If you still have some time between now and when you’re planning to buy, try to save as much as you can for that all-important down payment. This will help maximize your chances of getting approved and getting the best possible rate on your mortgage.
If you don’t have enough saved up to afford the home you want, creating a budget can help you save more. You can also grow your down payment in the meantime by putting what you’ve already saved into a safe, liquid investment like a GIC or high-interest savings account, or temporarily investing your savings in an RRSP, TFSA, or the new First Home Savings Account (FHSA).
“Investments with a short time frame such as 12 months or less should be in savings accounts or cashable GICs,” says Alan MacDonald, a Chartered Financial Analyst (CFA) and Senior Investment Advisor with RBC Dominion Securities’ MacDonald Advisory Team in Ottawa, Ontario. “Buyers who haven’t owned a home in the last four years should also take advantage of the FHSA, which lets you contribute up to $8,000 per calendar year. You get a tax deduction for each contribution and no tax payable when you use the funds to buy your first home. But unlike an RRSP or TFSA, the contribution room doesn’t carry forward if you don’t open an account.”
The information discussed in this article should not be taken as financial or legal advice. This article is for informational purposes only.
— REALTOR.ca