This year has not been at all boring for the Canadian real estate market. Early in the year, prices reached record highs, but when interest rates started to increase, the market swiftly came to a standstill between buyers and sellers. More than 1800 Zoocasa readers participated in a survey, and 60% of them said they planned to buy soon. Many people are clinging to the optimism that spring would bring more inventory and the end of interest rate increases. Now is the time to start planning if you want to enter the market in 2023. Although we are unsure of what the market may hold for us next year, we do know how you can get a head start on being prepared for it. Here’s how to prepare for the 2023 Canadian housing market.
Talk to a Mortgage Broker Now to Learn What You Can Afford
Many would-be homebuyers and current homeowners who have mortgages are obviously concerned about mortgage rates. In an effort to control inflation, the Bank of Canada has increased interest rates six times this year. The next announcement is planned for December. Inflation was 6.9% in September, and by the end of 2023, the target rate should be approximately 3%. If inflation doesn’t start to decline in 2023, it’s feasible that interest rates will have to go much higher. The prime lending rate for anyone looking to obtain a new mortgage, renew their current mortgage, or who is currently paying a variable rate would, of course, be impacted by this.
Speaking with a mortgage broker is the first step in getting ready to enter the market. Your debt service ratios will be discussed with a mortgage broker after they have examined your present financial status. Lenders use this information to determine the maximum loan amount you are eligible for. It’s crucial to speak with a range of mortgage brokers and look into lenders besides the major banks. They frequently have lower rates and a variety of mortgage options. Pre-approval for a mortgage will aid in your search. A pre-approval ensures that you will be able to take advantage of the rate for the following 160 days. In the early stages of your property hunt, you are therefore protected in the event that rates rise in December or early in the following year.
If you plan to buy in 2023, monitoring inflation is essential. Rates may remain at or possibly fall lower if the economy continues to trend in a downward direction toward the Bank’s target, making the variable rate mortgage a wise choice. “Anyone with less budgetary wiggle room should think about locking up a fixed rate. According to James Laird, co-CEO of Ratehub.ca and president of mortgage provider CanWise, “Anyone with adaptable household finances might keep onto their variable-rate mortgage in anticipation of future dropping rates that may be required to stimulate the economy if we end up in a recession.”
What Are Your Needs vs. Your Wants?
It’s crucial to weigh your needs in relation to your wish list’s “nice to haves.” Living close to excellent schools might be on your “need” list if you’re a parent, but being adaptable and looking into various communities with excellent schools could speed up your search for the ideal house. Read more about how flexibility helped Zoocasa clients find their ideal family home here.
When purchasing a home, you should keep in mind the location, the kind of property, the cost of housing, and other significant facilities. You’ll have a better notion of how to choose a property that suits your demands once you know what budget you have to work with (and maybe some of your wants too). Once your finances are in order, you can determine how much wiggle room you have for these things.
Prepare for Changing Markets
The busiest season for real estate is typically spring. Learn more about real estate cycles by clicking here. Although the market has slowed recently as a result of interest rate increases, the spring often sees an increase in the number of buyers and sellers. There were 16,363 sales in April 2021. Due to interest rate announcements, April was less active than January this year, when interest rates were still low but there were 5,636 sales instead of 8,008 due to the lower activity. Just 4,961 were sold throughout the month of October.
Although there aren’t as many bidding wars and other competitive situations right now, many potential buyers and sellers are optimistic about the spring market, which may result in some competition. Find a local real estate agent that can help you achieve your homeownership goals if you’re buying right away. Finding a trained agent who will market your home to appeal to the most potential buyers is essential if you’re selling. This advice also applies to buyers!
Your best course of action, whether you’re looking to buy or sell in 2023, would be to speak with one of our knowledgeable real estate agents who can walk you through the procedure and assist you in making the best choice for your future. See how Zoocasa agents have assisted their clients in discovering their dream homes by reading our five star reviews.