For today’s post, we turned to Taylor Hayes, a Mortgage Agent with Today’s Mortgage Choice to learn more about the state of mortgage rates and homeownership in Scugog today.
Do you regret not entering the housing market in 2022 when rates were extremely low? If so, don’t stress as there are many reasons why entering the market today could potentially leave you in a better position.
While rates were low in 2022, the market experienced heightened sales activity which pushed up home prices to all time highs. The Canada Mortgage and Housing Corporation (CMHC) is forecasting home prices could match record levels seen in early 2022 by next year and reach new highs by 2026. Since July 2023, the Bank of Canada has maintained steady rates through six review periods, prompting many homebuyers to enter the market ahead of an anticipated competitive spring season. Despite a boost in listings as a result of the busy spring market, housing supply remains critically low across the country. This shortage continues to be one of the primary drivers of rising home prices, overshadowing the impact of previous low interest rates that rose quickly and are now sticky. My advice to prospective homeowners is to enter the market before the Bank of Canada starts lowering its benchmark interest rate, as it is predicted home prices will further appreciate which could end up costing you more in the long run.
Let’s compare the average sale price of a home in Scugog in March 2022 when interest rates were extremely low and home prices reached their peak vs. purchasing in March 2024 while we are in a higher interest rate environment but home prices are substantially lower.
5-Year Fixed Rate: 25-Year Amortization
| March 2022 | March 2024 | |
| Average Purchase Price | $1,298,531 | $967,812 |
| Average Down Payment | $259,707 | $193,562 |
| Average Mortgage Amount | $1,038,824 | $774,250 |
| Interest Rate | 3.77% | 4.99% |
| Monthly Mortgage Payment | $5,335 | $4,520 |
| Mortgage Insurance | N/A | $21,679 |
| Average Land Transfer Tax | $22,445 | $15,831 |
As you can see, despite paying a higher interest rate the average monthly payment is $815 less in March, 2024 compared to March, 2022. This is a result of home prices appreciating while in multiple offers and bidding wars due to a surge of activity within a market that is short on listings. The Canadian housing market has witnessed robust price appreciation and heightened sales activity within the first few months of 2024 as buyers anticipate future rate cuts from the Bank of Canada. The CMHC said affordability in the homeownership market will be a concern for the next three years, as declining mortgage rates and the country’s strongest population growth since the 1950s will likely spur a rebound in home sales and prices.
In January, the Canadian Real Estate Association (CREA) expected a 10.4% increase in home sales this year and a 2.3% rise in the average home price for 2024. CREA revised their forecast expecting home prices to climb 4.9% in 2024 as home sales rose last month. The reported number of home sales in March rose 1.7% compared with a year ago. The average price of a home sold amounted to $698,530, up 2% from March 2023, indicating sidelined buyers are entering the market ahead of expected interest rate cuts.
Additionally, purchasing before interest rates lower and the possibility of home prices further increasing leaves buyers in a better position to benefit from potential future appreciation. As the market continues to appreciate, buyers who purchased at a lower price point stand to gain significant equity in their homes.
This brings me back to the importance of the saying “marry the house, date the rate.”
You can read Taylor’s post about this on our blog right here.
At the end of the day you are not married to your interest rate, but the price you paid for your home is locked in forever. There are many ways to overcome the challenge of higher interest rates, but there is no solution to price-focused bidding wars other than increasing your offer or losing out on your dream home. In this current environment, I’m advising clients to obtain a shorter mortgage term and renew once rates lower or refinance down the line.
There is an expression in the mortgage world: “if you wait for the rate, it could be too late.” Now is the time to embark on your homeownership journey, take the first step towards fulfilling your aspirations by contacting me today to become pre-approved!
Taylor Hayes 416-617-3956
Today’s Mortgage Choice LIC #13324
Do you have questions about buying a home in Scugog or the surrounding area? Reach out today to team@willowsgroup.ca or call 1.888.926.2066, we’re happy to help!
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