{"id":11550,"date":"2019-05-31T08:00:25","date_gmt":"2019-05-31T12:00:25","guid":{"rendered":"https:\/\/www.zolo.ca\/news\/?p=11550"},"modified":"2025-05-08T07:53:01","modified_gmt":"2025-05-08T11:53:01","slug":"right-time-to-buy-house-2019","status":"publish","type":"post","link":"https:\/\/www.zolo.ca\/blog\/right-time-to-buy-house-2019","title":{"rendered":"Is 2019 the Right Time to Buy a Home?"},"content":{"rendered":"\n

I want to buy a home at the right time, and honestly, who doesn\u2019t? As someone who is continuously browsing listings and daydreaming about which IKEA couch would fit best in my imaginary new living room, there are questions I\u2019ve asked myself many, many times, like how can I score the lowest price possible? Will the market be good when I plan to buy? <\/span><\/p>\n\n\n\n

Right now, my plan is to buy a home in Calgary, Alta. in 2020; but given all of the articles I read say 2019 is the best year to buy a home, next year might not be the perfect time to buy. <\/span><\/p>\n\n\n\n

In theory, the best time to buy a home is when you have a sound financial plan and the stars align \u2014 but is that possible? Let\u2019s find out.<\/span><\/p>\n\n\n\n

Find Out What Type of Market You Plan to Buy In<\/h2>\n\n\n\n

There are three types of real estate markets that operate in a cycle. Right now, the general Canadian housing market is mostly in a <\/span>balanced market<\/span><\/a> \u2014 which means that between 40% to 60% of homes actively listed on the market sell within a specific time frame, usually 30 days.<\/span><\/p>\n\n\n\n

If not in a balanced market, only four major Canadian markets \u2014 London, Ottawa, Hamilton and Montreal \u2014 are in a seller’s market. In these cities, over 60% of houses have sold within 30 days. <\/span><\/p>\n\n\n\n

The rest of Canada is lucky because these real estate markets are in a buyer\u2019s market, less than 40% of homes sell, which means there is much more supply than demand. This is the primary reason why analysts are touting that 2019 might be the perfect year for you to <\/span>buy a home<\/span><\/a>.<\/span><\/p>\n\n\n\n

\"buyers
Source: Zolo.ca<\/figcaption><\/figure>\n\n\n\n

Buyers tend to wait for homes to decrease to their lowest possible price, but this isn\u2019t always an option. \u201cThe only way to find out when you\u2019re at the lowest price is when the prices start to rise again,\u201d says Ron Roy, an <\/span>Alberta<\/span><\/a>-based real estate broker for Zolo. \u201cThere is no way to say the market price of this house is $480,000, and it\u2019s not going any lower than that.\u201d <\/span><\/p>\n\n\n\n

Rather than play a guessing game, let\u2019s look at non-speculative factors that can guide your decision to buy in 2019:<\/span><\/p>\n\n\n\n

Interest Rates Are at Historic Lows<\/h2>\n\n\n\n

Have you ever wondered how important interest rates are? Same. Turns out they matter a lot. Interest rates impact the size of the mortgage you can qualify for and how much it will cost to borrow that money. <\/span><\/p>\n\n\n\n

To get the <\/span>best rate<\/span><\/a>, you need a solid credit score of 720 or above, a provable income and an income-to-debt ratio of no more than 44% of your gross monthly income. <\/span>Mortgage terms vary anywhere from six months to 10 years \u2014 or longer \u2014 with a five-year fixed mortgage rate being the most popular term in Canada. <\/span><\/p>\n\n\n\n

Reasons for this mortgage rate being the most popular can get complicated, but it has to do with the five-year rate historically offering the best value between security and cost \u2014 or how long you can lock-in a good rate and guarantee that your payments won\u2019t increase during that time.<\/span><\/p>\n\n\n\n

Economists had an inkling that 2019 would be the year for <\/span>mortgage rates to drop<\/span><\/a> due to a slow global economy. Robert McLister, the <\/span>founder of <\/span>mortgage rates<\/span><\/a> consolidator site RateSpy.com, says your energies are better spent determining the best term and then finding the lowest possible rate for the features and service you need. <\/span><\/p>\n\n\n\n

Don\u2019t forget that terms dictate the rules of your mortgage, whereas rates determine your monthly and overall costs to borrow. Both are important.<\/span><\/p>\n\n\n\n

What we do know, according to McLister, is that right now interest rates are <\/span>down-trending. That\u2019s good. However, there’s no way to know if they’ll keep trending down. For that reason, the market is responding. <\/span><\/p>\n\n\n\n

\u201cWe’re seeing increased interest in 10 year fixed rates these days,\u201d said McLister mainly prompted by the competitive move on May 18th, when <\/span>HSBC<\/span><\/a> bank lowered their 10-year fixed rate to a historic low of 2.94%. This made the typical  2.74% five-year fixed rate, offered by competing lenders, far less appealing. <\/span><\/p>\n\n\n\n

The lending market is pricing in an economic slowdown, explains McLister. Lenders realize that their mortgage business is about to decrease in volume, so they\u2019re trying to get as many clients as possible locked-in \u2014 but competition now doesn’t mean rates can\u2019t drop again in the future. <\/span><\/p>\n\n\n\n

For first-time homebuyers, like you and I, a good tip to secure a home at the best possible time is to lock in a mortgage rate that will keep our finances on the right path. Why? Assuming you have a mortgage with a 25-year amortization, for every 100 basis points (that\u2019s 0.1%) that rate increases, you\u2019ll pay about  $470 more in interest over five years on every $100,000 of that mortgage. For a more in-depth look at how rising rates impact home affordability, check out our analysis <\/span>here<\/span><\/a>. Locking in when interest rates are low can save you a lot of money long term.<\/span><\/p>\n\n\n\n

\"What
Jenn Gerlach \/ Source: CMHC, Zolo
Notes: Maximum house price includes the total mortgage plus the 10% down payment, minus the CMHC mortgage default fees.<\/figcaption><\/figure>\n\n\n\n

The Housing Market Is Far More Stable Thanks to Government Regulation Changes<\/h2>\n\n\n\n

It\u2019s not uncommon to attempt to predict the best time to buy a home, but don\u2019t confuse market analysis with market timing \u2014 one is an attempt to assess a situation the other is speculation. We all know how well speculation works in the investment world. <\/span><\/p>\n\n\n\n

The national Canadian housing market has gone through some significant changes as of late. An increase in government regulation, including the foreign buyer\u2019s tax and the mortgage stress test has certainly helped to slow down and level out even the hottest markets.<\/span><\/p>\n\n\n\n

For example the introduction of the Ontario Non-Resident Speculation Tax<\/a> (NRST) in April 2017, when foreign home buyers were charged an additional 15% on purchase or acquisition of residential properties in the Greater Golden Horseshoe Region.<\/span><\/p>\n\n\n\n

Shortly after this tax was introduced, foreign buying dropped significantly. Non-resident buyers only accounted for 7.2% of sales in May 2017 and this continued to drop to 5.6% by the end of August 2017. The Ontario government has seen evidence that more people are able to find affordable homes, in large part due to this <\/span>regulation change<\/span><\/a>.<\/span><\/p>\n\n\n\n

\u201cAll of those regulations, plus higher interest rates have slowed the housing market down quite significantly,\u201d explains <\/span>Benjamin Reitzes, BMO Director of Canadian Rates & Macro Strategist. <\/span><\/p>\n\n\n\n

These new government regulations have shown great effort to level out the market, whether it was speculatory or not. \u201cThat\u2019s something they\u2019ve taken care of,\u201d says Reitzes.<\/span><\/p>\n\n\n