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If you’re thinking of buying a home in Quebec, one of the first things you should do is get familiar with housing costs in the province, as well as in the local areas that you plan to look in. Buying a home is an expensive undertaking and one that requires careful consideration.
You’ll need to ensure that the homes you eventually look at come with listing prices that closely align with your finances. Even if your income can cover the mortgage payments, you should still leave some wiggle room for other expenses that tend to come with everyday living.
Let’s take a look at where home prices are currently in Quebec.
How Are Listing Prices Established?
Sellers come up with listing prices with the assistance of their real estate agents. While the final sale price might not necessarily exactly match the asking price, it should be pretty close if the listing price reflects the current market. So, how are listing prices determined?
When it comes to real estate, location will always be the key factor in determining the value of a property. But there are many aspects to assessing a home’s location when it comes to assigning value.
For starters, a home’s location will be assessed in terms of its proximity to amenities such as roadways, public transit, groceries, entertainment, schools, parks, and others. Anything that can make the location more desirable for buyers will, in turn, help make the home more valuable.
Other factors also play a role, such as the home’s exact location within a neighbourhood. For example, whether the home is on a busy street or is tucked away on a quiet cul-de-sac will also make a difference in property value. And the reputation of the neighbourhood also matters, such as crime and economic statistics.
The term “comps” is short for “comparables” and refers to similar properties in the area that have recently sold. Real estate agents use comps to come up with listing prices for their seller clients.
These recently-sold properties tell the story of what the current market is doing. It’s not enough to just look at current listing prices, though this can be helpful. Instead, the actual sale price is what should be looked at, which is exactly the type of information agents review when they come up with a listing price.
Ideally, the comps included on the list should meet the following criteria:
- Be located in the same neighbourhood
- Have recently sold no further back than 3 to 6 months prior
- Be similar to the subject properties (similar size, type, and number of bedrooms)
The closer in similarity the comps are to the subject property, the more accurate the listing price will be.
Condition Of Your Home
Even if two properties are the same size and type, they could differ a great deal in terms of their condition. While one home may be in very good shape, the other could be in dire need of TLC. The one that’s in much better condition would be valued higher than the home that needs repair and updating.
As such, any refurbishments made can affect a home’s value. Buyers may be more willing to pay more for a home that’s in good condition and has been recently updated than a home that could use a little work. Generally speaking, homes in need of TLC will be listed at lower prices to accommodate for the work and money needed to bring them up to par. On the other hand, homes that have been updated and are in tip-top shape can fetch higher prices.
As a buyer, you’ll want to assess the listing prices of homes you are looking at, which your real estate agent will help you do. Just because a seller has listed their home at a certain price doesn’t mean their home will sell for what they’re asking for.
Sellers will be more likely to get offers that are very close to the asking price if they’ve listed accurately. Real estate agents who represent buyers will pull their own set of comps to make sure that the listing prices of homes on the radar accurately reflect the current market.
Average House Prices Of Quebec
As of December 2020, the average price for a home in Quebec is $403,726. That’s a 20.7% increase from December 2019, when the average price was $334,599. Keep in mind that this is the province-wide average for a home, which may be much different from different real estate centres across Quebec.
Consider the following areas in Quebec and their average home prices, as of December 2020:
- Montreal: $418,000
- Gatineau: $338,359
- Sherbrooke: $336,613
- Greater Quebec City $263,300
- Trois-Rivières: $202,504
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 Quebec Home Prices Compare To The Rest Of Canada?
Quebec’s province-wide average home price is well under the nation-wide average. In Canada, the average home price is currently $607,250, compared to Quebec’s average of $403,726. From October 2019 to October 2020, Quebec’s home prices rose 20.7%, compared to Canada’s jump of 15.2% over the same time frame. Clearly, home price appreciation has increased at a quick pace over the past 12 months both on a national and provincial level.
In fact, Quebec joins other provinces — including Ontario, PEI, and Nova Scotia — as the biggest drivers of home price appreciation across Canada, as they have each experienced significant increases in home prices.
How Much Should You Spend When Buying A Home In Quebec?
Before you start pounding the pavement in search of a new home, you should focus on a certain price range. This will help you avoid disappointment and wasting time so you can look only at properties that fall within your budget. So, how much should you spend on a home in Quebec?
To figure that out, take the following steps:
Get Pre-Approved For A Mortgage
Chatting with a mortgage professional should be one of the first steps you take in the homebuying process. This will help you determine how much you can afford in a home purchase and what loan amount you can get approved for after making an offer on a home.
Your mortgage professional will help you get pre-approved for a mortgage. A pre-approval will tell you the maximum loan amount you can take out after an assessment of your finances. Armed with this number, you can then start looking at homes that match your financial comfort zone.
Make A List Of All Your Current Expenses
You might have some idea of how much you currently spend on expenses, but you’ll need an exact number to accurately determine how much of your income would be left over for mortgage payments. Consider the more common expenses below:
- Credit card bills
- Car loans
- Student loans
- Personal loans
- Car insurance
- Miscellaneous expenses
Calculating all your outgoing expenditures every month and comparing it to what you earn will give you a better idea of how much money there is left that can be dedicated to paying a mortgage.
Calculate Your GDS And TDS
Gross debt service (GDS) ratio. This ratio is a measure of all your housing debt compared to your income. Housing costs include the principal, interest, taxes, and half of any applicable condo fees. Lenders prefer to see GDS ratios of less than 30% to 35%, otherwise, you may be seen as too much of a risk to your lender.
Total debt service (TDS) ratio. This ratio is a measure of your total debt — including any housing debt — compared to your income. Lenders prefer to see TDS ratios of less than 42%.
Lenders will use GDS and TDS ratios to determine how much of a loan amount you may be approved for. Armed with this information, you’ll have a better sense of the price you can afford to pay when looking for a home to buy in Quebec.
What Are The Costs Of Owning A Home?
In addition to making your mortgage payments, there are plenty of other bills that will need to be covered as a homeowner. You’ll need to account for these costs and include them in your overall budget to make sure you can comfortably afford your mortgage and all the bills that come with it. Crunching the numbers will also help ensure that you don’t wind up “house poor.”
Here are some of the common expenses you can expect when owning a home:
- Property taxes
- Home insurance
- Maintenance and repairs
- Condo fees (if applicable)
Quebec is a relatively affordable province to buy a home in, especially when compared to other provinces — like Ontario and British Columbia — and Canada’s average price as a whole. Regardless of where in Quebec you plan to buy a home, it would be in your best interests to evaluate your finances, take the time to save up for a sizable down payment, and do your homework so that you can focus on looking at homes you can comfortably afford.
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