Buying a home in Ontario can be exciting, yet overwhelming. The province is full of a variety of municipalities, scenic neighborhoods, and property prices which can really make pinpointing your ideal home a challenge, and making sure they can realistically compete and afford in the area they are interested in.
As a first-time buyer, you can sometimes be surprised by the obstacles in your path to buying a home This is especially the case in Ontario where a 4 bedroom home can be over a million dollars in Toronto, but under more affordable in the $500,000 to $700,000 range in towns like Kincardine or St. Catharines. This post will explore the different challenges you may face as a first-time buyer and how a real estate agent or brokerage can help you overcome them.
Inventory
This is one of the biggest issues in many current housing markets. Inventory shortages are one of the main challenges for first-time home buyers in Ontario, and it may continue to be an issue into the new year. In short, there simply aren’t enough houses on the market to meet the demands of home buyers in Ontario.
2021 surely did confirm that we are experiencing a record low inventory in the Ontario real estate housing market. Ontario has had one of the hottest housing markets in the country, with demand stretching from Toronto to Windsor that experts believe is unlikely to reverse as time goes on.
The province’s housing supply is continuing on this downward trend, while demand continues to surge in the province. The Canadian Real Estate Association states that close to two-dozen Ontario markets had only less than one month of inventory at the end of November. This shortage of residential properties, particularly single-family properties, is expected to continue in 2022.
Your real estate agent or real estate brokerage can help you as a first-time buyer because they have experience with finding the perfect home for you and they have access to listings that you otherwise wouldn’t be able to find on your own. This can help expand your search for the perfect home.
Affordability
Another main concern as a first-time home buyer is affordability. A lack of affordable housing options can be a big obstacle, especially in real estate markets where prices have raised significantly in the past couple years.
Buyers who take home an average income might find out that they can no longer afford to buy a median-priced property. This issue is especially big for first-time home buyers since they won’t be able to leverage a previous home sale to finance their purchase. Plus, with a housing inventory shortage, drives up the prices of homes even more.
Many Canadian home buyers are using alternative options to help them get a foot in the housing market. For example, pooling together finances with relatives or friends to buy a home, or sharing a living space with friends. Your real estate agent will be able to work with you to figure out alternative ways you can finance your home, including taking advantage of new incentives for first-time home buyers. They can help you connect with a lender or look at financing options at different financial institutions. Your real estate agent or brokerage will also be able to help you look for homes in areas that you might not have been considering, that might be better suited for your budget or price range as well.
Debt-to-Income Ratio
Many lenders require borrowers to have debt loads that are no more than 44% of their gross monthly income. This includes the estimated costs of their mortgage loan.
This means that for those first-time home buyers who have a lot of debt compared to their monthly income, mortgage financing may seem out of reach. However, your real estate agent or real estate brokerage can still help you if you find that you are having trouble getting a mortgage.
Real estate agents are typically in constant contact with bankers, lenders and other professionals involved with the buying process. Your agent can help you determine how much you can afford to spend on a home, as well as connect you with a trusted lender who can help you come up with a path to homeownership, and help you get pre-approved for a mortgage so that you can start your house hunting sooner.
Speak with one of our real estate agents today if you are interested in learning more as a first-time home buyer in Ontario.
