As we step into 2024, the dream of buying a home in Canada is a lofty investment for many. Despite a slight dip in home prices, a recent report from RateHub indicates that Canadians may need to earn more than last year to make homeownership a reality.
In Toronto, for example, as of March 2023, potential homebuyers need an annual income of $217,000 to afford a home priced at $1,118,500. This marks a $6,250 increase from March 2022, even though the average home price in the city dropped by more than $200,000. Vancouver follows a similar trend, requiring an income exceeding $200,000 to afford a home. In the rest of the country, the annual income required ranges from $75,000 to $170,000.
With these stats in mind, here are four strategic considerations to help you navigate the path to homeownership in 2024.
- Financial Preparedness: Start by assessing your financial readiness. Understand your credit history, debt levels, and savings. Leverage tools like mortgage calculators to estimate costs and identify areas for financial improvement.
- Mortgage Options and Rates: Explore the diverse mortgage options available in Canada, considering fixed-rate and variable-rate mortgages. Stay informed about market trends and seek professional advice to make informed decisions.
- Budgeting Wisely: Effective budgeting is crucial, irrespective of your location. Develop a comprehensive budget aligned with your homeownership goals, helping you manage expenses and save for your down payment. Be mindful of the additional costs of homeownership, such as a home inspection, lawyer fees and repairs on top of your offer.
- Regional Realities: Recognize the regional nuances impacting home affordability. Despite declining average home prices, the RateHub report underscores the need for higher annual incomes in Toronto and Vancouver. Tailor your financial strategy to the specific conditions of your desired location, and consider relocating to a more affordable area.