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Are you planning to buy a home in New Brunswick sometime in the near future? If so, you’ll want to get a sense of what the market is like in various centres across the province, as well as what the average home price is province-wide.
Considering the magnitude of such a purchase, buying a home should come with a lot of homework and due diligence.
Let’s take a look at where home prices are currently at in New Brunswick to help you make a more informed home buying decision.
What Factors Affect Home Prices?
No matter which province or city you plan to buy in, the same factors will impact the price paid for a home. At the end of the day, a home is only worth what a qualified buyer is willing to offer. But what buyers may be willing to pay will be influenced by a variety of factors, including the following:
The Current Market
Real estate markets go through cycles. Sometimes they may be classified as “seller’s markets” that are characterized by a plethora of buyers vying for a small inventory of available homes. And other times, the market may be deemed a “buyer’s market,” in which case there are more listings to choose from compared to the smaller pool of buyers on the search for a home.
The temperature of the local market will have an impact on how expensive or affordable homes on the market will be.
A healthy economy is characterized by a few things, including a low unemployment rate and higher wages. When people are working and making decent incomes, they have more money to spend on assets like a home. This can fuel the demand for housing, which, in turn, can drive home prices up.
But when the job market is weak, the demand for housing decreases, which can put downward pressure on home prices.
Mortgage Interest Rates
Mortgage interest rates have been extremely low over the past few years, making mortgages much more affordable than they were years earlier. Buyers may be in a better financial position to take out a mortgage to buy a home when rates are low. And when this happens, the demand for real estate increases. And when demand is strong, housing prices can go up.
But when mortgage interest rates are very high, it can be much more difficult to obtain a mortgage. In this case, the borrowing and buying power of Canadians shrinks, thereby reducing demand for housing and keeping home prices lower.
“Location! Location! Location!” is a common mantra in the world of real estate. The same home may be worth much more when it’s located in a desirable area than if it was located in a less desirable neighbourhood. Location matters when it comes to pricing a home and plays a direct role in the value of the real estate.
Age And Condition Of The Property
In general, a newer home in good condition can demand a higher price than an older home in rough shape.
Size Of The Home
While there are some exceptions to this rule, a home with more square footage will generally be more expensive than a much smaller home.
Certain traits are considered more desirable compared to others, such as granite counters and hardwood flooring. As such, they can contribute to a higher listing price.
Average House Prices In New Brunswick
The average price for a home in New Brunswick is currently $203,907 as of December 2020. That’s an 11.8% increase from December 2019 when the average home price was $182,366.
Consider the following markets in New Brunswick as of December 2020, along with their average home prices:
- Greater Moncton Area: $227,000
- Saint John: $209,702
- Fredericton Area: $195,022
- Northern New Brunswick: $152,602
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%|
How Do Home Prices In New Brunswick Compare To The Rest Of Canada?
The average price for a home in New Brunswick is far below the national average. Canada’s average price for a home is currently $607,250 as of December 2020, compared to New Brunswick’s average of $203,907.
Over the past year, the province’s home prices have increased by 11.8%, compared to Canada’s 15.2% increase over the same time frame. Like other provinces across Canada, New Brunswick has experienced healthy gains in home prices over the past year.
How To Determine How Much To Spend On A Home In New Brunswick
Before you buy a home, it’s very important to assess your current financial situation and establish a budget to stick with. Even before you start looking at listings, you should have a clear idea of what you can afford to spend on a home. This will better prepare you for the house hunt while streamlining your efforts.
Here are some things to consider when determining how much to spend on a home purchase in New Brunswick.
Make A Detailed List Of Your Current Debts
The paycheque you collect every month should be adequate enough to not only cover all your current bills, but also leave some leftover to accommodate a mortgage payment. To find out how much of your income you can spare if you added a mortgage to the mix, you should make a detailed list of all your expenses and debts.
These can include any of the following:
- Car loans
- Student loans
- Personal loans
- Credit card debt
- Life insurance
- Car insurance
- Rent (if applicable)
- Miscellaneous expenses
Determine Your Gross Debt Service (GDS)
Your GDS is a measure of the debt you carry for housing relative to your income. Lenders usually don’t want to see a GDS any higher than 30% to 35%, as a higher number can increase your risk of defaulting on your loan. If your GDS is more than 35%, you may have a harder time getting approved for a mortgage.
Determine Your Total Debt Service (TDS)
Your TDS is a measure of all your debt, which also includes your housing debt, relative to your income. Lenders typically prefer to see TDS ratios no more than 42%. Any higher than this figure puts you at a greater risk of failing to make your mortgage payments because of debt overload.
Your GDS and TDS ratios will give your lender a better idea of your ability to manage mortgage payments on top of all your other debts relative to how much you earn. It will also help them determine what type of interest rate to offer you if you are approved, as well as your maximum loan amount.
Calculate The Costs Of Owning A Home
Owning a home comes with many more financial responsibilities compared to renting. In addition to your mortgage payments, you’ll also be obligated to cover the following expenses:
- Property taxes
- Home insurance
- Maintenance and repairs
- Condo fee (if applicable)
The prices of homes in New Brunswick are relatively affordable compared to other provinces, as well as the nation-wide average. Regardless, it would be in your best interests to assess your financial situation and take the time needed to save up for a sizable down payment before buying a home in New Brunswick.
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