Have you been feeling the pinch of rental payments extra hard lately? If so, it’s definitely not something you’re imagining. According to Zumper, the average cost for a one-bedroom apartment in Guelph is now $1949, an 18% increase from this time last year. A two-bedroom averages out at $2199, an increase of 16% from 2021.
Inflation is hitting everything, but rent seems particularly affected. You don’t need to look any further than the housing market to find out why. For the past two years, housing prices have been astronomical, making it nearly impossible for first-time buyers to enter the market. And most of the people who aren’t buying are renting instead. In Guelph, the competition is particularly fierce given that it is a university town.
However, the real estate market has changed, and the timing might be perfect for you to leave the rental market behind for good.
The Price of Houses in Guelph has Dropped
Since the Bank of Canada started raising the target interest rate in March, housing prices have slowly decreased. At one point, the price for a detached house in Guelph rose to an average of $1,149,194. A townhouse came in at an average of $879,310, and even a condo would cost an average of $670,548.
Fast forward to the latest available statistics, and the price of a single-family home has fallen to $933,347. You can get a townhouse for approximately $664,084, less than a condo would have cost you six months ago.
Condos now average out at $524,839, a decrease of $145,709.
In the rental market, the opposite has happened. As the prices of housing are coming down, the cost of rent is going up. Now that houses are more affordable, it’s an excellent time to buy and build your own equity instead of paying off someone else’s mortgage.
Do you need more reasons to think about buying your first home soon? These articles will give you something to think about:
- Seven Reasons Why this Could Be Your Best Opportunity to Buy a Home in Guelph & the Tri-Cities
- Could Buying During A Recession Be A Genius Investment?
- Buying an Older Home? Here Are The Red Flags To Watch Out For
There is More Inventory Available than in Months
Earlier this year, it was almost impossible to buy a house even if you had the cash in hand, as there were very few listings. In February, we reached a point where there were only two weeks worth of supply to satisfy the exploding demand. That’s why so many bidding wars took place and drove up the price of houses even more.
At the end of August, there was more good news for buyers, with a much healthier 2.5 months’ worth of inventory.
More listings with less competition give you time to plan and search for the right home within your budget.
Contending With Higher Interest Rates
The falling housing prices don’t paint the whole picture, unfortunately. Higher interest rates can also affect the affordability of buying a home. It makes passing the stress test much more difficult as it is calculated at an even higher rate to ensure you can afford the fluctuating payments.
For first-time buyers, there is some relief in the form of government programs designed to increase homeownership.
- The First Time Home Buyer’s Incentive: The government lends you 5 to 10% of your down payment, helping you overcome the toughest obstacle to purchasing your first home.
- The Home Buyer’s Plan: Pull up to $35,000 from an RRSP or TFSP to put towards your down payment without incurring any tax penalties.
- Land Transfer Rebate: This program saves first-time buyers as much as $4,000 on closing costs that cannot be rolled into the mortgage.
- First-Time Home Buyer’s Tax Credit: You can claim a credit of $5,000 on your tax return the year you buy your first home, which reduces your taxes by $750.
Want to know more about government programs for first-time buyers? Check out our post “Will a Shifting Market Help Millenial Buyers.“
Getting Out of the Rental Market Starts with a Plan
There’s no denying that buying a home is more accessible than it has been for at least two years. However, that doesn’t mean the process is easy. Plenty of research and a few action steps beforehand can improve your chances of finding and purchasing the right starter home.
Get pre-qualified or pre-approved
How do you determine how much you can afford for your new home? A pre-qualification is the fastest and easiest way to get an estimate. You can complete a form online and get your results back within minutes. However, you’ll want to take those results with a grain of salt.
For serious buyers, a pre-approval is much more involved, but it also gives you a much more accurate idea of how much you can qualify for. As an added benefit, your pre-approval can give you an edge over other buyers if you end up in competition.
Decide on a housing structure
A one-bedroom condo may represent your least expensive option for breaking into the housing market. But is it really the best? Depending on your situation, it might be better to pay slightly more for a townhouse where you can potentially take on a roommate to help with your monthly costs.
Alternatively, a single-family home with a legal basement apartment will cost more upfront. However, it may actually make your purchase more affordable because you can factor in any potential income when applying for your mortgage.
Determine your location
Deciding where to live can be even more important than deciding what type of house you want. Do you want to be in the heart of the city, close to transit, shopping and other amenities? Or do you prefer something quieter and more out of the way? When deciding on your location, be sure to consider the lifestyle you desire.
How quickly do you want to move in?
If you want to move as soon as possible, a resale home is likely your best option. If you have plenty of time and are willing to be flexible, you might consider a pre-construction home.
Can making your first purchase an investment property make it more affordable? Here are some reasons it just might:
- How An Experienced Guelph Real Estate Team Can Help With Your Investments
- Is Now A Good Time To Buy An Investment Property In Guelph?
- Will Real Estate Protect You in Times of Inflation?
Work With a Local Real Estate Agent
An experienced local real estate agent is your best resource for escaping the rental market and getting into your first home. Even if you’re not 100% sure what you’re looking for, they have the tools and resources to help you identify the perfect opportunity.
Are you ready to say goodbye forever to the rental market? We would love to help you get started! Reach out by email or call 519-826-7109 with any questions you have.
