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The Frustrated Homebuyer’s Guide To Real Estate

Posted by S. Kotliar on September 10, 2022
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Home prices have started coming down. However, it has been quite difficult for the people to afford a condo or a home. That’s mainly because of the increasing mortgage interest rates. On the other hand, the rents have started going up as well. People have therefore found it as a difficult task to pay their down payments as well.

If you are frustrated with things that are happening around you, you may go through this guide. We will share some useful tips with you on how to proceed with investing on your new home.

Is the home price rising based on the fundamentals of economics?

The home prices around Greater Toronto area have been increasing before COVID as well. This was mainly driven by the fundamentals of economic. However, the prices have doubled in the past year, and it also follows the fundamentals of economics. A housing bubble would take place when more and more people start purchasing homes in the form of an investment, instead of using it as a place to live. This is what happened in the Canada during past two years.

What can you do to overcome the challenges caused by increasing mortgage rates?

Even though houses are quite expensive for purchase, things are improving a little along with time. For example, the people who look forward to purchase single-family homes are not willing to spend over $1 million as down payments. However, around 20% of the homes would now require a down payment of over $1 million.

The main advice that we can give to you is to take advantage over the reducing home prices. If you look around, you will notice that a considerable number of homes are available for purchase under $1. Hence, it is better if you can cut down your requirements a little and proceed with purchasing a home that is not too expensive.

Will there be a sweet spot for me to make a purchase?

It is quite difficult to predict and confirm whether there will be a sweet spot for you to make your purchase. Regardless of the fact that housing prices are under 25% of the peak value, the houses available for purchase now are quite affordable when compared to the peak value that they had back in the month of February. However, most buyers out there have found it as a difficult task to purchase homes because of the high interest rates. Since most buyers are not in a position to purchase houses because of such interest rates, the interest rates are not expected to fall down in short term. Hence, the affordability of houses will continue to decline further along with time.

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