House hunting: A buyer's guide

With all the doom and gloom we've been hearing lately about the softening real estate market, one important fact is being overlooked: it's a great time to buy. Housing prices in many Canadian cities are flat or actually lower than they were this time last year, houses are staying on the market longer, and the supply of available homes is increasing, making sellers more willing to negotiate. The heady days of the real estate boom -- characterized by multiple offers, bidding wars and having to move fast or risk losing out -- are, by most estimates, over.

Thankfully, Canadians have, for the most part, escaped the carnage that has hit the American housing market. Sub-prime mortgages are relatively unheard of up here and riskier mortgage products, such as zero-down and 40-year amortization, are being phased out. Mind you, most analysts predict that Canadian lenders will not escape the downturn unscathed, and that one of the most obvious effects for consumers will be that credit won't be as easy to obtain as it once was. But if you're in a financial position to buy a new home, there's no reason to wait. Real estate continues to be an excellent investment, and there's great value for money out there.

Advice for homebuyers
Kathy Monahan, an agent with the Toronto real estate firm Forest Hill Realty, has some good advice if you're thinking of buying a home right now. "First of all, get an agent; most people don't realize that when you're buying, the agent doesn't cost you a thing -- her commission is paid by the seller. She knows the market, can help you find good houses and steer you clear of bad ones." Word of mouth is one of the best ways to find a good agent, or visit a few open houses and "shop" the agents to find one you're simpatico with.

How much can you afford?
Early on, you need to figure out how much house you can afford. Make an appointment at your bank to get pre-qualified, a no-obligation process that will determine the maximum mortgage you can afford, which, added to your down payment, will give you a target (or maximum) price range. However, keep in mind there are a number of additional fixed costs to factor in: most crucially, many provinces and cities now levy Land Transfer Taxes, which vary depending on the province and town but together work out to about 3 to 4% of the price; there are also closing costs, lawyers' fees, moving fees, and perhaps a budget for redecorating and painting or renovating once you move in.