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Buying a home is the biggest expenditure you’ll likely ever make. And given the rising home prices throughout Canada, having a solid grasp on your finances is a must to comfortably handle such a major investment. If you’re thinking of buying a home in Manitoba, you should take the time to find out what the going price is throughout Manitoba in order to better budget and save for a down payment.
Factors That Affect Home Prices
Several factors influence the price that you’ll pay for a home at any given time:
- Mortgage interest rates – A lower interest rate will make mortgages more affordable. This increases the demand for housing and drives prices up.
- Housing supply – When there are more buyers on the market than homes available for sale, prices go up. But when there is ample inventory compared to buyers, prices can stagnate.
- Location – A key factor when it comes to the value of a property is its location. A desirable neighbourhood will command higher home prices compared to less-attractive neighbourhoods.
- Size of the home – In general, larger homes are valued higher than smaller ones, though many other factors come into play that can affect a home’s value.
- Age and condition of the property – Newer homes are less likely to require maintenance and repairs than older homes, which usually makes them more valuable, with certain exceptions. Plus, modern materials are more in-demand, which can also contribute to higher prices compared to older homes in poor condition.
- Characteristics – Certain traits can add value to a piece of real estate, like hardwood flooring and stone countertops.
- Comparables – Real estate agents use neighbourhood comparables — or “comps” — when establishing a listing price. Comps are homes that are similar to the subject property, are located in the same neighbourhood, and have recently sold.
- The economy – A healthy economy is usually associated with higher home prices thanks to stronger consumer spending.
- Unemployment rates – Low unemployment rates mean more people are working. And when people are bringing in a regular income, they have more money to spend on things like real estate. In this case, demand for real estate will increase, which can drive home prices up.
Average Home Prices In Manitoba
The price of a home will vary quite a bit from one end of the country to the other. As of October 2020, the average home price for a home in Manitoba sits at $316,280, which is an increase of 11% from the same month in 2019 when the average price was $285,013.
The housing market is relatively healthy throughout Manitoba, as is suggested by the sizable increase in home prices over the course of the last 12 months. Over the summer of 2020, Manitoba also set records for total sales dollar volume. In July, for example, home sales were worth $637 million, marking a whopping spike of 38.1% from the same month in 2019.
Here are some of the average home prices in popular centres in Manitoba as of October 2020:
- Winnipeg $289,400
- Brandon $250,775
- Portage La Prairie $207,202
Comparing Average House Prices By Province
|Home Prices 2019||Home Prices 2020||Year-Over-Year % Change|
|Newfoundland and Labrador||$270,500||$281,800||4.2%|
|Prince Edward Island||$249,770||$298,668||19.6%|
Manitoba Home Prices Compared To Nation-Wide Prices
According to the Canadian Real Estate Association (CREA), Manitoba’s average home price of $316,280 is about half of Canada’s average home price of $604,250 as of October 2020. Canada’s current national average is relatively high and saw an increase of 15.2% from the same month last year when the average price was $526,901. The biggest drivers of this rate of increase include Ontario, Quebec, Nova Scotia, and PEI.
These numbers are quite interesting, especially when considering the ongoing pandemic. While many other industries have slowed down significantly, the real estate industry in Manitoba and Canada as a whole remains stable and strong.
Tips For Buying A Home In Manitoba
If buying a home in one of Manitoba’s many real estate markets is on the agenda for you, consider the following tips to ensure a smooth and affordable transaction.
Get Pre-Approved For A Mortgage
One of the first steps you should take is to speak with a mortgage expert. There may be plenty of homes available for sale, but there’s no point in looking at properties that you can’t afford. While you might have an idea of how much you can spend on a home purchase, you won’t really know until you’ve had your finances assessed by a mortgage specialist and are pre-approved for a home loan.
A lender will look at your financial information and inform you of how much they’ll lend you and what you can afford. Armed with this information, you can focus only on properties that match your budget so you don’t waste your time looking at homes that are out of your price range.
To determine the maximum amount you can borrow to buy a home, lenders will calculate your gross debt service (GDS) and total debt service (TDS) ratios. Your GDS represents how much of your gross annual income will be dedicated to paying housing expenses, like mortgage payments (including principal and interest), utilities, and property taxes. Your TDS represents how much of your gross annual income will be dedicated to covering all your debt payments combined.
GDS ratios should be no more than 30% to 32% of your gross annual income, and TDS ratios should be no more than 37% to 40% to be approved for a mortgage.
Find Out What Your Mortgage Options Are
A mortgage specialist will tell you about all the financing options that may be available to you. You should take the time to find out about various types of mortgages, what interest rates are offered, terms and amortization periods available, the difference between fixed- and variable-rate mortgages, and so forth.
Don’t Make Any Major Changes In Your Finances
Your pre-approval is based on your current state of finances. If you make any changes — such as changing jobs, taking out new loans, or moving large sums of money around shortly before taking out a mortgage — you could sabotage final mortgage approval.
Leave your money where it is so you’ll always have a complete paper trail, and avoid applying for new loans or credit accounts in the weeks leading up to your home purchase.
Determine Your Exact Needs In A Home
You should make a list of all your wants and needs before starting the search for a new home. This can include the following:
- Number of bedrooms
- Number of bathrooms
- Yard space
- Proximity to work
- Proximity to amenities
- Types of schools in the vicinity
Don’t just think about what your current needs are, but consider what your potential future needs will be as well. Unless you plan to move after a few short years, you may want to consider how your home will serve you years down the line. Consider things such as a growing family or mobility issues as you age, for instance.
Keep in mind, however, that there may need to be some compromise involved if you must stick to a certain budget. It’s possible that some of the traits you’re looking for in a home may not be available within your price range. Consider the need to possibly trade certain features for others to make your home purchase fit well with your finances.
Don’t Forget About The Hidden Costs Of Homeownership
Your mortgage will certainly be the biggest monthly cost in terms of homeownership. But there are plenty of other costs that you’ll need to cover to operate your home, and these expenses should be included in your budget. Additional costs can include:
Make sure that you leave enough room in the pot to cover these costs so you don’t wind up ‘house poor‘.
Work With A Local Real Estate Agent
Team up with a real estate agent who is well-versed in the area you’re looking to buy in. Understanding the local market will help your agent find you a home at the best price. Plus, your agent will negotiate the lowest price possible on your behalf, which can leave more money in your pocket.
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Have The Home Inspected
Take the opportunity to have the home you intend to buy inspected by a professional. Inspecting the home will help uncover any potential problems with the home that could be costly to repair. If you do find any issues, you can either renegotiate a lower price with the seller, ask the seller to make the necessary repairs before you move in, or back away from the deal altogether.
Regardless, a home inspection will help ensure that what you’re buying is worth the money you’re spending.
Learn how to buy a foreclosed home.
Give Yourself Time To Get Final Mortgage Approval
A mortgage pre-approval is a great idea, but it doesn’t guarantee final approval. Your lender will need to see a copy of your purchase agreement to find out how much you agreed to pay for the property in question. Once the lender has that figure to work with, they can start finalizing mortgage approval.
Don’t know what documents you’ll need? Here is a mortgage document checklist.
To allow time for that to happen, it’s important that you insert a financing condition in your contract to give you a few days to ensure that you can secure a mortgage. And if for some reason you’re unable to get final approval, you’ll be able to back off from the deal without being stuck with a home that you can’t afford.
A home purchase is a very expensive endeavour. Luckily, Manitoba’s home prices are relatively affordable compared to many other parts of the country, including the nation-wide average. That said, buying a home is a significant financial investment. Considering this, it’s important to take the time to assess your finances to determine how much you can comfortably afford in a home purchase before putting an offer on a home.
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