For the past two years, Canadian real estate has seen an unprecedented seller’s market. Since 2020, prices have gone through the roof, the bidding wars turned fierce, and many prospective first-time homebuyers were priced out of the market. While we’re technically still in a seller’s market, the winds of change have begun to cool down previously red-hot selling conditions, creating a window of opportunity for those looking to purchase their first home. Rising interest rates mean falling home prices in inflationary environments, and this has been especially true for entry-level homes. Barrie in particular has become more affordable and still has the best rate of return out of any urban centre in Simcoe County. While this is all great news for buyers in general, those looking to purchase their first home now have access to multiple government programs that aim to help first-time buyers break into the market.
Says Peggy, “Affordability continues to be our biggest challenge and will continue to be the barrier to entry. I can’t emphasize enough the importance first time buyers make to Simcoe County. When they don’t buy, the rest of the market stalls. I feel confident as prices have softened quite a bit since the top of February 2022, that buyers and investors will slowly start re-entering the market.”
Here’s a guide to help prospective homebuyers reach their first home milestone in Simcoe County’s market:
Take advantage of the cooling market
It’s been a challenge for those looking to enter the housing market in Simcoe County, so if you were house hunting in the last few years and found yourself having to put your plans on hold, now may be a good time to check out the changing landscape. While interest rates continue to rise, the corresponding drop in home prices is helping to level the playing field for first-time buyers, making markets previously difficult to enter much more accessible. Now is the time to engage (or re-engage) in the process. The other caveat to this market is the high rents and very low vacancy rates. Rentals are very expensive and very difficult to find. At the end of the day, if the payment makes sense, you are far better off buying in this market.
Do the math
Your first step is to speak to a mortgage professional to get some clear direction on how much you can afford and what your mortgage payments will look like. We recommend doing this even if you’ve already done so in the last few years; in fact, we recommend doing this even if you think you’re not quite there yet. Making a plan is still taking a step.
There are many options for down payments for first time buyers. Find out how much you’ll need for a down payment on a property. Some experts recommend 20%, however, buyers can put down as little as 5% (see the table below for more information). .
| Purchase price | Minimum down payment required |
| Under $500,000 | 5% of the purchase price |
| $500,000 to $999,999 | 5% of the first $500,000 + 10% of the portion of $500,001 to $999,999 |
| $1 million plus | 20% of purchase price |
Covering your down payment, while a significant hurdle, isn’t the end of the story unfortunately. Speak to a professional about average home inspection fees, closing costs such and the cost of moving. Don’t forget to include a cushion in your savings of at least three months’ worth of income for repairs, property taxes and emergencies.
Check out government initiatives
To help alleviate some of the challenges facing first-time buyers, the federal and provincial governments have introduced tax rebates and other programs to help as many people enter the market as possible, with even more initiatives coming this year. Buyers in Simcoe County now have access to the “Affordable Homeownership Program,” a county-specific initiative for low-to-moderate income renters looking to purchase their first home. The program provides 10% down payment assistance (to a maximum of $50,000) in the form of a 20-year forgivable loan. Helping renters transition to home ownership frees up rental units, which in turn encourages developers to foster demand by building affordable housing. You can read more about the program here: https://www.simcoe.ca/dpt/sh/apply-for-the-homeownership-program
Another program seeking to assist first time buyers is the First-Time Home Buyer Incentive, offered by the Government of Canada. This program provides 5 or 10% of a home’s purchase price to put toward a down payment, lowering mortgage carrying costs and making owning a home viable for more Canadians. You can learn more about this initiative here: https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive
Talk to a real estate expert
When you’re navigating the purchase of your first home, it’s easy to get overwhelmed; that’s why it’s so important to reach out to housing experts when making big real estate decisions. A good Realtor® should be able to provide you with guidance about the type of home you can afford and some recommended neighbhourhoods to consider. At The Peggy Hill Team, we’re always happy to answer whatever real estate questions you may have, especially if you’re buying or selling for the first time.
Connect with us today, and let’s achieve your real estate goals!