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.Make a wish list
What neighbourhoods do you like? How many bedrooms? Do you want a garden or low-maintenance landscaping? Parking? An older home or a new one? A condo? Fully renovated or ready for transformation? Do you prefer to be near good schools, shopping, transit, or have good highway access?
Once you've toured a few houses with your agent, eventually you may find a promising prospect. Don't let emotion go too much to your head; there are some important points to consider before making an offer.
Take a second look
The simplest is to go back for a second look. A house that seems idyllic on a Sunday morning may be dark and dreary on Monday evening. Ask about the neighbours. Are they considerate? Are there any buildings or other things in the area that could be turnoffs (a noisy high school down the street, bars or other attractions that could make street parking difficult on weekends)?
Look closely for things you might have missed the first time: the roof, the general state of repair, the size of the rooms. If you're still serious, consider a house inspection, which can cost as much as $250 or more, but will tell you in exacting detail what work needs to be done. (The cost of repairs uncovered by an inspection can sometimes be negotiated between buyer and seller.)
Meanwhile, your agent should investigate the prices of comparable properties on the street and help you come up with a reasonable offer. Assuming there are no other offers in play, there may be a bit of bargaining between buyer and seller before a price that's acceptable to both is reached and the final offer is accepted.
Congratulations! The home is yours!