As many of you may know, the COVID-19 pandemic has consequently created an unforeseeable path to homeownership for a large group of Canadians. Ultimately, mortgage rates fell to historically low rates with a low inventory of homes, this created an extremely competitive seller’s market. More and more millennials and younger generations are left on the sidelines feeling that homeownership may be out of reach on the island and are considering alternative home bases.As restrictions loosen and we try to find normality in our daily routines and life, the demand for housing has remained constant pushing pricing up in the process.
What does this mean for the younger generation trying to get into the market?
Younger generations are being forced to be more practical with their buying power. After a competitive year search in the market, first-time home buyers and younger demographics are now more flexible and understanding of their wants and needs within their budget in the new standard current market conditions.From an investment standpoint, one thing we do know is that the real estate market has been on a steady incline of return of investment in the past 5 years. We expect that rates will continue to rise into 2022 making it more difficult for buyers to secure financing.
Don’t wait, it truly is a great time for investors. This could mean securing a low rate with a reduced risk to fund a self-paid and sufficient rental unit to a piece of land to be built on in the coming years. Now is the time to invest in the housing market in Victoria before it becomes out of budget. More buyers than ever are looking for homes with additional office or outdoor spaces which wasn’t a popular trend a few years ago. Getting into the market is a lengthy process and requires a lot of patience, especially with the current conditions. It’s much harder these days for younger generations to get into the housing market due to the inflation in house prices compared to 3 years ago. Wages are not increasing at the same rate as inflation. Take advantage of the programs available for qualifying first time buyers.
One option for a down payment for first-time buyers is the RRSP program. This program allows buyers to take from their RRSP account and use it as a portion towards their down payment to be repaid within 15 years. First-time buyers who are permanent residents and Canadian citizens can qualify for the land transfer tax rebate. The $4,000 rebate caps at $368,000 and any further cost incurred is owed. A first-time buyer incentive is also an option, a shared-equity mortgage with the Government of Canada that offers 5% to 10% depending on the type of home purchase price to put towards the down payment. There are required factors as to what the borrower’s annual household income is and what area the property resides in.
If you have been contemplating entering into Canada’s housing market, meeting with a REALTOR® will help you understand the programs and options available to you.
Give me a call or text and I am happy to discuss your options.