September 2022
This year’s housing market in Edmonton has been strong thanks to interest rates and a hot demand for available homes. As you’re making the decision to buy a new home, you may be wondering if it’s a good time to buy. Here are the top reasons to consider buying a home before the end of 2022!
Interest Rates are Rising
The Bank of Canada held its record low interest rates over the past several years, but it has made several increases this year as demand for homes has risen. Despite these increases, rates are still competitive, and lenders are looking for your business. Rates may continue to increase over the next year, so it is best to take advantage of current rates.
Housing prices in Edmonton are holding steady and are still very affordable. This may not always be the case based on the trend of inflation we’ve observed in the past several months. Combining today’s new home prices with current interest rates, locking in a purchase now will safeguard you from rising interest rates, keep your mortgage payments affordable, and help build equity sooner.
Demand for Homes is Increasing Due to Population Growth
As Edmonton’s population grows, so does the demand for homes. Canada has been a strong supporter of immigration in the interest of helping refugees and strengthening the economy and is anticipated to welcome over 400,000 new immigrants each year. Many of these new Canadians settle in Edmonton for its appealing economy and affordable living costs.
This additional demand for new homes may create an increase in pricing. According to the Government of Alberta, Edmonton’s population has grown 9.63% over the past five years alone.
Edmonton is an ideal city to relocate to with its affordable cost of living. Edmonton is ranked the most affordable city in Canada in which to live, and fourth most affordable internationally. It is also the second fastest growing city in Canada, which could lead to housing cost increases over the next several years.
Edmonton’s population growth includes those moving from other countries, as well as Canadians moving from more expensive cities such as Vancouver and Toronto.
Edmonton has a Strong Job Market
Although Edmonton’s home prices are among the most affordable in the country, the job market offers an average household income $10,000 higher than the Canadian median. This leaves more money in the pockets of Edmontonian homeowners and creates more financial flexibility.
Edmonton’s unemployment rate hit a five-year low earlier this year to less than 5%, with tens of thousands of new jobs being created in the past several months alone. And these jobs are not just in the energy sector; Edmonton has much more to offer in a diverse range of industries, including technology, agriculture, life sciences, manufacturing, among others.
Buying a home in Edmonton is not only more affordable than most cities in Canada, but being able to find work that pays more than the Canadian average makes the decision even easier.
Canada’s Mortgage Stress Test is Still Low
In 2016, the Federal Government implemented a new restriction on mortgage qualifications for anyone applying for a new mortgage. This mortgage stress test requires applicants to qualify for their mortgage at a higher interest rate than what their lenders are offering. The purpose of this is to ensure home buyers can afford their mortgage not just at the time of home purchase, but also in future should interest rates increase.
In 2022, the interest rate applicants must qualify at is 2% above the rate offered by your lender or 5.25%, whichever is higher. This qualification rate applies to both insured (purchases with less than 20% down payment) and uninsured mortgages (purchases with more than 20% down payment.)
As the Bank of Canada continues to assess its lending rate in our recovering economy, the qualifying rate by the mortgage stress test can increase. Taking advantage of mortgage rates and the current stress test rate can be the difference between qualifying and not qualifying for your new home’s mortgage.
Down Payment Assistance Programs Available
There are several government programs available to help you with the down payment on your new home purchase. If you are a first-time buyer, you can take advantage of the First-Time Homebuyer’s Incentive and the Home Buyer’s Plan (HBP) if you also have a Registered Retirement Savings Plan (RRSP). Other available programs are the Home Buyer’s Amount and the GST/HST Housing Rebate Program.
Edmonton’s affordable cost of living, combined with still-low interest rates and a strong job market make right now an ideal time to buy a new home. Lock in your home price and interest rate today and start building equity for your future.
Contact one of our qualified Area Sales Managers today to discuss how we can help you find your new home!