Whether or not Canadian real estate prices are rising out of reach of the average Canadian depends on location. Although much of the attention has been focused on the high price of owning a home, a recent study by Royal LePage suggests that there is a vast difference between the real estate markets of large cities and the rest of the country.
The study indicates that although the average home price across the country rose between 3.9% and 5.2% in the second quarter of 2014, much of that was fuelled by home prices in major cities like Toronto, Vancouver and Edmonton. Smaller cities, like London and Ottawa, saw much smaller gains of 1%-2% in their housing markets.
Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, says making the prudent choice when buying a home is essential –
“Buying too much home can result in a lifetime of debt,” says Schwartz. “The wiser choice is to purchase a reasonable home with a manageable mortgage that won’t be a financial burden for the rest of your life.”
Canadians living in smaller city centres have an advantage in the type of home they can afford in comparison to big city dwellers. Royal LePage’s Phil Soper explains smaller cities are affordably priced
“While a widening affordability gap in Canada’s largest urban centres is characterizing the national market Canadians read about daily, year-over-year house price increases in most regions of the country are presently tracking below the historical average,” says Soper.
Consolidated Credit offers the following tips to those in the market for a new home –
- Smaller price equals smaller debt – All else being equal, choosing the less expensive home will probably result in a smaller debt load. Sacrificing that extra guest room could save you years of debt down on the road. Choose a home that fits your family – not what fits your imagination.
- Save up for a large down payment – Paying off a large chunk of your home price with a sizable down payment will lower your interest rates and decrease your monthly payments. This is a solid debt management strategy that will leave you spending less on interest, resulting in more money your pocket.
- Examine all costs – Your mortgage isn’t the only cost associated with owning a home. Different cities have different property taxes which can add thousands of dollars to the cost of keeping your home each year. Additionally, factor in any repairs or home maintenance you will have to make on the home. This will ensure you avoid falling into credit card debt as a result of unexpected costs.
If you want to learn more about making responsible financial decisions, check out Consolidated Credit’s free Personal Finance educational section. If you’re struggling with debt, call one of our trained counsellors today at 1-888-294-3130 for a free debt analysis.