The housing market is out of reach for first-time buyers. Being a recent buyer myself with XLR8 Realty I found an interesting article about the housing market in Ottawa and wish to tell you about it.
Because of a low supply, multiple offers, and now higher borrowing costs, it means even getting a townhome could cost thousands of dollars a month in mortgage payments.
Ms Kernohan has been trying to buy a house for months.
She had hoped with what she had she could buy a house right now. Meghan has been approved for $500,000, yet she is struggling to find something that fits her budget. She is paying $1,682 in rent per month and she feels she is building someone else’s equity.
Meghan is discouraged because housing prices are hitting record highs and many are squeezed out of becoming homeowners. She has many questions as do others like: Should she even try? Should she fall in love with a place? Should she put herself out there? Is she going to get it?
Interest rates have been historically low in the past two years but unfortunately for those looking to buy, rates have already started going back up. Mortgage rates during the pandemic are by far the lowest rates we have ever encountered. One could get a five-year mortgage a year ago between one-and-a-half, to one-and-three-quarter percent range. Today we are close to normal when it comes to fixed mortgage rates.
Two years ago, you could get a townhouse for $500,000 with a monthly mortgage payment of about $2,000. Today, that same townhouse sells for $650,000 with a higher interest rate and you’re now looking at almost $3,000 per month.
XLR8 Realty broker Christopher Lyons agrees
With the observation that prices in Ottawa might be higher than in years past, this is now the new normal and it’s unlikely prices will ever go back down.
Houses are not inflated prices and it’s not going to crash. What is happening is basically, the true price value is starting to actualize and she has seen properties that are very similar, priced at $599,000, $699,000, and at $799,000 and they all tend to sell at the same price.
A common issue she sees is sellers pricing their homes below market value, resulting in a bidding war. For example, if a house is listed at $499,000 when really it probably will sell close to $700,000, they shouldn’t be pricing it at $499,000 because there’s a lot of people with broken hearts after that.”
For Meghan Kernohan, she says she will continue to hunt for her dream home, but she’s worried that the opportunity might never come. Meghan is single, a small business owner, makes a good living, has great credit, and she has all the things that really, as she grew up, she says she should be able to just go and get the house of her dreams. But despite having all those things, that’s not the reality for her and many first-time buyers.
For more information see our friends at CTV News
