Now that summer is here, the summer real estate market is in full swing. If you’re thinking about buying a new home this season, what will the market look like for you? We have watched the market evolve throughout the first half of the year, influenced by inflation and the Bank of Canada. Here’s what you can expect as a home buyer this summer, and how you can start preparing!
Today’s interest rates
The Bank of Canada’s most recent announcement earlier this month resulted in a 0.25 per cent increase to the overnight rate. This pushes the current overnight rate to 4.75 per cent, more than three per cent higher than last June’s number. What does this mean for buying a new home this season?
Since interest rates are higher this summer than last year, the buying experience will look a little different. Both fixed and variable rates are higher, meaning borrowers are dealing with larger interest rates on their mortgages. However, the good news is that as a whole, inflation continues to decline in Canada. While the most recent rate increase might make some borrowers uncomfortable, the central bank will most likely not need to embark on another aggressive rate hike cycle.
Supply and demand
How are supply and demand shaping up in the Barrie market? Buyers are in a fairly good position this season. According to Zolo, there have been 803 new listings over the last four weeks, and 282 homes sold. This means there is a decent amount of housing inventory, giving buyers more options and time to commit to their purchases. The average home is also spending 17 days on the market. While homes are not sitting on the market for months on end, they are also not coming and going within a day. Finally, the selling to listing price ratio is right at 100 per cent. On average, homes are selling for right around their listing price, indicating the market is stable between buyers and sellers. These numbers show that neither supply nor demand are hugely dominant over the other. As a buyer, the market conditions will be fairly balanced.
Housing prices
The average sold price across all property types in Barrie is currently $786,000. This is a monthly and quarterly increase, but it is actually a 9.4 per cent annual decrease. Homes are less expensive than this point one year ago, but prices are on the rise. However, we will have to wait to see if the most recent interest rate increase will deter buyers from entering the market at all from this point onwards.
With this in mind, if you’re thinking about buying a new home this summer, it may be better to start acting earlier rather than later. The longer you wait to enter the market, the more likely you are to experience market fluctuations, both in terms of interest rates and housing prices. Of course, you shouldn’t rush if you are not fully prepared! However, it’s a good time to start thinking hard about your next steps.
What are your first steps?
Speaking of next steps, what should those be? Once you commit to purchasing a home, the real work begins. One of the first things you should do is contact a mortgage broker to work with you throughout the entire process. We will explore that in more detail below! Apart from reaching out to a broker, you also need to secure a real estate agent. Realtors can help you find the right property, put in offers and negotiate with sellers. Their guidance will make the experience much easier for you. You should also make a list of everything you need in a new home. This includes property size, number of bedrooms, location, etc. Narrowing down your needs will help you and your agent find the perfect home faster. Finally, it’s essential to know your budget before you start house hunting. This is where a broker comes in!
How a broker can help!
Working with a mortgage broker can really help secure your success when buying a home. When you meet with a broker, you will provide them with all your financial information so they can help you determine what your buying budget should be. This is a helpful and easy way to ensure you don’t purchase a home you can’t afford. Brokers can also help you get pre-qualified for a mortgage. This means gaining an estimate of how much money a lender may be willing to finance for your mortgage, depending on your current situation. Pre-qualifications are great tools for learning more about your position in the market and how you can improve, if necessary. Plus, when it’s time to secure your final mortgage approval, a broker is there to make sure you are signing onto a product and a lender that best supports your needs. The market can be hard to navigate, and using a mortgage broker is a simple way to ease any confusion. You can read more about using a mortgage broker here.
If you’re hoping to buy a home this summer, be sure to give yourself the best start possible. Understanding interest rates, market trends, and the benefits of professional guidance is critical. If you have any questions about your mortgage, get in touch with me!