December 9th, 2022 | Buying
Why Now is a Good Time for Buyers in Ottawa
On the heels of the latest Bank of Canada (BOC) announcement, many aspirational buyers might feel like their chances of buying a home in the near future might be dwindling. While the media reports might seem a little grim at the moment, things are actually not as bad as you would think.
In fact, it might actually be a good time to buy a home in Ottawa.
Here is why:
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Interest Rates Are Higher, But There is Still Affordability to Be Found
Yes, the interest rates have gone up in the past year. Most recently, the Bank of Canada increased its policy rate to 4.25%. This absolutely has an impact on home buyers. While the BOC policy rate and mortgage interest rates are not the same things, they are closely connected.
A higher policy rate translates to higher mortgage rates, especially for variable-rate mortgages. Buyers may have a harder time getting pre-approved and the amount of mortgage you can qualify for might be lower because of the increased costs associated with higher rates.
However, despite the rates rising, prices are actually down year-over-year. In fact, the most recent Ottawa Real Estate Board (OREB) stats show that home prices for residential properties was down by about 5% year-over-year at $680,031.
When home prices are down, it means buyers can save some money on the following:
- The total mortgage amount is lower.
- Reduced land transfer taxes
- A lower down payment and deposit
- Lower mortgage insurance fees (if applicable)
As you can see, many homebuyers can save money on some of the upfront costs involved with buying a home. And for many buyers, these costs are the main barriers to entry.
Wondering if a fixed-rate mortgage or variable-rate mortgage is better for you? We interviewed a mortgage broker to shed some light on the topic! Read the full blog here.
The Market Favours Buyers
In its latest market report, OREB president, Penny Torontow says the market is likely shifting away from a ‘balanced market’ and is moving towards becoming a ‘buyer’s market.’ This means that the market conditions are favourable for buyers.
A buyer’s market is when there are more active listings on the market than there are buyers currently looking to purchase. It results in a soft market where prices start to come down, homes stay on the market for longer periods of time, and you see more conditional offers or even below-asking offers. The power of negotiation is in the buyer’s hands.
If the Ottawa market is truly trending towards becoming a buyer’s market, this is great news. It means buyers can do more due diligence when looking for a property. They can take their time, negotiate the price, and put conditional offers together.
In 2021 and early 2022, when the market was at its peak, many buyers felt burnout. Homes were on the market for mere days before getting sold, and it was extremely difficult to purchase real estate.
Now, in a softer market, buyers can capitalize on these conditions and use them to their advantage in finding the right home.
If you’re thinking about buying a home in the near future, you likely have some questions! Read these blogs next to learn more about homebuying:
- Can You Buy a Home with a Co-Signer?
- Is Now a Good Time to Become a Real Estate Investor in Ottawa?
- Strategies to Help First-Time Buyers Enter the Real Estate Market
But, Isn’t it a Bad Idea to Buy a Home in the Winter?
For many years, real estate followed a traditional cycle. Homes were listed in the spring and fall, and the summer and winter were quiet. However, since the pandemic, most cities have felt a shift from the seasonal cycle of real estate to a more personal cycle.
Home sellers are not all waiting for the right time of year to sell their homes.
Many sellers are selling for specific reasons, either a personal change, relocation, you name it. More and more people are realizing that real estate doesn’t need to follow a traditional path and the best time to buy or sell is whenever you are personally ready.
Additionally, there are some other benefits to buying a home in the winter. Here are a few you may not have yet considered:
- Sellers are typically more motivated to sell in the winter and could be more likely to negotiate a better deal.
- For many professionals, the beginning of the year is slower at work, which could give you more opportunities to find a home you love.
- Depending on your career, perhaps you were the recipient of a holiday bonus that could help with your purchase.
- While there may be fewer homes available on the market, there are also fewer buyers looking, which means less competition for you.
Not sure which Ottawa neighbourhood is right for you? We love talking about our community! Read some of our community blogs here:
- Best Ottawa Neighbourhoods for Commuters
- Everything You Need to Know About Relocating to Ottawa
- Ottawa: More than Meets the Eye
Remember, Buying a Home is Long-Term Investment
The final piece of advice we have to offer on buying a home sooner rather than later is the fact that a home purchase is a long-term investment. Real estate interest rates will always go up and down, it’s the nature of the economy.
The sooner you get into the market, the sooner you begin paying off your mortgage, building equity, and growing your wealth. Over a long period, property values almost always trend upwards, so buying now, when the market is softening, will result in more appreciation when the market corrects itself.
There’s no doubt, the real estate market in Ottawa is turning in favour of buyers. If you’d like to learn more about buying a home in Ottawa, reach out directly to our team, we’re happy to help answer any questions. Call us directly at 613.829.7484 or email mail@chellteam.com today.
