Is now a good time to buy a new home?
- Home Buying Tips
- Thursday, June 2, 2022
The pandemic triggered a sharp drop in interest rates, a vast build-up in household equity, and changing housing needs sent an unprecedented wave of Canadians rushing to purchase a home. By mid-2021, existing inventories of both pre-owned and newly built homes were substantially depleted, especially sought-after single-family homes, which left homebuilders trying to increase inventory in order to meet the rising demands of buyers.
While homebuilder’s inventory have been slowly building up in 2022, so have home prices, which has left those looking for a new home wondering … is now a good time to buy? Let’s take a look at some factors that might help you make the right decision.
Interest Rate Increases
Historically, 2021 saw some of the lowest mortgage rates on record. Levels did rise from the lows reported early in the year but remained far below what was available in the market before the pandemic. This was one of the main drivers of the strong housing demand growth recorded in 2021.
The Bank of Canada has already increased interest rates in 2022 and is expected to announce more rate increases this year; however, rates are still expected to remain below pre-pandemic levels – low enough to continue to support housing demand, just not at the pace seen in 2021.
There is plenty of speculation regarding The Bank of Canada moving towards “oversized rate hikes” in order to offset inflation, but ultimately, further rate hikes this year will depend on how the economy reacts to higher borrowing costs and will depend on variables such as consumer spending and inflation.
Post-pandemic economic recovery, combined with job growth, population growth, and a low unemployment rate are expected to add to the demand for housing, all pointing toward relatively strong home sales in 2022.
The pandemic resulted in Canada facing the worst economic loss in nearly a century, causing business closures and unprecedented job loss across the country. However, 2022 has seen the economy experience a strong recovery.
Businesses were able to safely reopen, and job creation surged. The Government of Canada is currently reporting a restoration of more than one million jobs – equating to a regain of 106 percent of jobs lost. Economists predict strong growth this year as the Canadian economy continues to recover from the pandemic.
The greatest factor to consider is, of course, your own personal situation and the reasons you may have to purchase. Do you have a growing family, or have aging parents that need to move in with you? Perhaps you have recently immigrated or need to relocate for work or school. Or, like many, the pandemic has caused your business to change, and you need space at home to work.
There are many reasons you may be considering a new home, and the short answer to the question is yes. Whatever else is going on in the world, if you have the need and are financially ready, buying a new house is worth the investment – even in the current changing market.
So, is now a good time to buy?
Buying a home is a smart financial investment simply because home values usually appreciate over time. Other benefits include home equity, tax deductions, and deductible expenses. It could also be secondary income if you choose to invest in a secondary suite option.
At Trico Homes, we offer many home options for every lifestyle, at any price range. Take advantage of one of the many programs Trico has to offer, such as the Leaseback Program, Referral Program, and Repeat Buyer Program. We look forward to working with you to find the right home!