One year ago, homes were incredibly affordable but no one wanted to buy one out of fear of the growing recession. These days, there is less fear in the recession and more people are now going into buying homes. The problem is that now, there are less homes being sold, and that drives up prices. Last year, there were plenty of homes for sale, which made prices lower. As the year went on, more homes were bought, fewer homes were put on sale, and more buyers came to buy homes. This created a seller’s market and that is why home affordability is falling.
Across Canada, home ownership has become more expensive for the first time in over a year and a half. Throughout the country, home prices have risen by 12 percent, with the highest jumps coming in Toronto and Vancouver. Affordability is not just about the mortgage. It includes the cost of owning a home, including the pre-tax household income that will go to the mortgage.
The biggest increase in prices for homes comes in two-story homes. When the rebound first began in mid-2009, demand for homes began to outstrip the supply of homes, which created a market that was highly competitive, with prices increases occurring throughout Toronto and the rest of the country. Unfortunately, this is not expected to change for the next few months. Until at least the first quarter of 2010, prices will continue to rise and home affordability will continue to affect many potential home buyers.
After the first quarter, more and more consumers will be able to buy homes for cheaper prices because supply will begin to meet up with demand. As well, interest rates are expected to rise, which will limit the number of buyers, creating a balance in the market.
What is making this most challenging for many people is that the recession is taking many jobs away from people, incomes are falling, but home prices are increasing. For many, buying a home right now is simply not possible and a fall in home prices has to be anticipated so that more people in Canada can take advantage of being a homeowner.
In the United States, it is the exact opposite as home prices continue to sit at record lows.
If you are thinking of buying a home, and have the money, then the time is right because of low interest rates. However, there is no reason why you cannot wait for a few months before you make the purchase.
Posted: 2009-11-30 12:48:13
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