Thursday, June 30, 2022

Some Canadians struggle to enter the housing market as costs rise: ‘We can’t do anything’ | Nation World News

Buying a home is out of reach for many families struggling to break into Canada’s booming housing market as home prices keep rising along with inflation and the high cost of borrowing.

Among the disappointed potential buyers is Mac Ross, an assistant professor at Western University’s School of Kinesiology in London, Ont. He tells Global News that he is struggling to find a big home for his growing family, even on the salary of a professor.

The family of four has been renting a two-bedroom home for the past few years, but the addition of a new baby forces Ross and his wife to put together a down payment five months before looking for a three-bedroom home fell.

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Average home value in Canada reached a record $816,720 in February

Although he says he found a few bungalows listed for under $500,000 that fit his budget and would accommodate a family, properties were asked for over $200,000.

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“At that point, we can’t do anything. It kind of boggles the mind that people are willing to pay that much,” he says.

The family has now adopted a holding pattern in their house hunting, and are waiting to see if spring brings any calm. The rent on his current home is stable and Ross says he has been able to absorb the hit from rising prices and interest rates, although his purchase budget has been maxed out.

They can’t wait forever, however, as the child is increasingly in need of a bedroom of their own, pushing for their current location to work or renting a more expensive home. Which will quickly burn through their downpayment savings.

“It was like our last chance, it was all we could possibly get. It’s impossible,” Ross says. “We won’t get home, I don’t know, until the bubble goes away or something.”

Click to play video: 'Canadian home prices climb to new highs, averaging $800K'

Canadian house prices $800K . reach new heights of average

Canadian home prices hit new highs, averaging $800K – March 16, 2022

degradation of housing

The Ross family isn’t alone in their dim outlook on the Canadian housing market.

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A recent report by Mortgage Professionals Canada (MPC) shows that 29 percent of respondents felt that now is a good time to buy a home in their community – the lowest figure in 12 years of the survey.

The MPC’s survey captured the impressions of more than 2,000 people, most of whom were already home owners. The market outlook is even worse among one in five respondents who don’t own a property: Only three percent said now is a good time to buy a home.

Many factors are now coming together to make homes out of reach.

Average home prices in February rose 20.6 percent year over year, according to data released this week by the Canadian Real Estate Association (CREA).

Meanwhile, inflation levels are at a more than 30-year high, Statistics Canada said on Wednesday, putting particular pressure on consumers at gas pumps and grocery stores.

Click to play video: 'Economists say inflation hit 5.7% in February, but has not peaked yet'

Economists say inflation hit 5.7% in February, but hasn’t peaked yet

Economists say inflation hit 5.7% in February, but hasn’t peaked yet – March 16, 2022

The Bank of Canada began raising its key interest rate target earlier this month, a move that looks to quell rising inflation and calm the housing market, but at the same time raise borrowing costs. and reduces the purchasing power of house hunters.

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Although wages are also generally rising in Canada’s tight labor market, economist Kyle Dames of the National Bank of Canada says that home price increases are “outing out” compensation for most Canadians.

Late last year the National Bank’s Housing Affordability Monitor pegged the ability for Canadians to pay their mortgages in major cities across the country every quarter of 2021.

Although the first quarter of 2022 is yet to be met, Dames says rising interest rates, along with other factors affecting Canadian pocketbooks, won’t help potential buyers like Ross.

“It’s going to be somewhat of a bite for homebuyers,” says Dams.

Read more:

Inflation came down to 5.7 per cent in February. Economists say it hasn’t peaked

He adds that the spring market, typically a busy time in Canadian real estate, could see some relief with additional listings coming to market as owners look to “offload” properties to minimize mortgage payments or maximize returns. .

A National Bank report from Tuesday showed new listings rose 23 percent in February, although overall inventory is short at just 1.6 months’ supply.

It’s too early to say whether rising stocks will become an ongoing trend, but the growth of new listings could reduce competition and provide an entry point into the market for potential buyers.

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“If that happens, (the market) may open up.”

House hunters are changing strategy

Some real estate watchers are already seeing changes on the horizon for the Canadian real estate market in response to rising interest rates.

Pritesh Parekh, Toronto realtor for Century 21, says he has already noticed a “psychological” shift in interest rates affecting his clients.

He says the initial 25-basis-point increase isn’t enough to stall the market.

Parekh portrayed it more like the market was moving at 150 km/h and the central bank’s announcement saw buyers ease up to 120 km/h of the accelerator – still faster, but to a lesser extent.

However, some clients have recently come to them, telling them they are putting their search on hold for the foreseeable future, so they are fed up with the war and bidding for unattended properties in Toronto.

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Click to play video: Kingston, Ont.  Canada sees highest housing price increase in 2021

Kingston, Ontario saw the largest increase in housing prices in Canada in 2021

Kingston, Ontario sees highest housing price increase in Canada in 2021 – February 8, 2022

Even with some search withheld, Parekh believes the current pressure on Canada’s pocketbook is not reducing housing demand, but is changing it.

“With all these factors, rate increases, price increases, inflation … I’ve seen floor versus demand changes,” he says.

While the past year of the pandemic has seen him work extensively to find detached homes for his clients, he is seeing some demand back towards Toronto’s more affordable downtown condo market.

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He’s also increasingly offering deals outside the GTA for those who can’t afford the Toronto real estate market. He says he recently helped a client obtain a $600,000 side investment in Kingston to gain an affordable share of the housing market and passive income while continuing to rent in Toronto.

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Parekh gives another example of a client who abandoned plans to buy a detached home in GTA, bought a condo in Burlington, Ont., and immediately set out to renovate bathrooms and other fixtures in the hopes of moving into a townhome. Done. next few years.

“I’ve seen a change in making the move from saving for your dream home to your dream home,” he says.

Some buyers want cheap pasture

Parekh says that in the past three months, three clients have told him that they no longer need his help to find a home.

It’s not because they’re leaving the hunt or have found a property in Toronto—instead, they tell him they’re going to Calgary.

Calgary is one of those major cities that is slightly more affordable than growing markets like Toronto or Vancouver.

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According to the city’s Real Estate Board, the average price of a home in Calgary in the second week of March was less than $500,000. In the National Bank’s most recent Housing Affordability Report, the household income needed to afford the average home in the city was more than $106,000—nearly half of the income needed to buy a home in Toronto.

Dahms adds Quebec City, Winnipeg and Edmonton as a few other standouts that have seen prices slow.

In fact, Ross found that his dismay at seeing three-bedroom homes in London for half the price in other parts of the country increased.

The Nova Scotia native says he’s seen East Coast real estate as an affordable option for back home Maritimers, and says that if the housing market in Canada doesn’t improve over the next two years, it’s inevitable that He may have to move his family to a more welcoming port.

“It gets to the point where you have to consider whether you can continue,” he said.

“Even though it’s my dream job… I’ll never, ever, get another opportunity, probably, to get hired at a school like Western. But if I can’t afford anything, that’s a discussion.” becomes what you should have.”

Click to play video: 'Lack of listings affecting the real estate market in Manitoba'

Lack of listings affecting the real estate market in Manitoba

Lack of Listing Affecting Real Estate Market in Manitoba – March 18, 2022

© 2022 Global News, a division of Corus Entertainment Inc.

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