Buying Your First Home in 2021? Here’s What You Need to Know
December 31, 2020
Like many Canadians, you may be planning to buy your first home in 2021. While it’s a monumental step requiring a lot of learning under normal conditions, the pandemic – which will likely continue for the majority of the year – creates a special set of circumstances worth considering. Here’s what you need to know before taking the plunge into homeownership in 2021.
Markets are expected to stay competitive
The effects of the pandemic on the 2020 spring real estate market are likely to continue playing out through 2021, despite what looks like a gradual return to more typical seasonal trends. The major factor for buyers to note is the low inventory of available homes in many parts of the country.
Low inventory levels in many Canadian markets are largely the result of fewer homes being listed in the aftermath of the first lockdowns in March 2020, in combination with the surge of buyer demand through the summer and fall. While the numbers of new listings have generally recovered, the Canadian Real Estate Association (CREA) predicts in their latest quarterly forecast that inventory levels will remain low through 2021.1
CREA’s forecast also predicts that sales activity will stay healthy for the year – rising by 7.2% – as more millennials move into homeownership and lending rates remain at a historic low.
What all of this means for buyers is that 2021 is likely to continue seeing seller’s markets, which could mean climbing prices, fast sales, offers with few conditions, and bidding wars.
You’ll need to do your homework
Currently, open houses are banned in “red zones” and “lockdown” regions, and REALTORS® continue to encourage buyers to tour only the properties they’re seriously considering. As such, house hunters no longer have the opportunity to stroll through a variety of homes to get a sense of what they like, and they’ve become increasingly dependent on technologies like 3D photos in lieu of in-person showings.
With the rollout of the COVID-19 vaccine only just getting underway in Canada, there’s a good chance that many of the safety measures affecting how real estate is bought and sold will persist through 2021, meaning buyers will continue having to do their homework to select only a handful of homes to go and see.
But as a first-time buyer, it can be difficult to know exactly what you’re looking for, and looking at hundreds of online listings can become overwhelming. To help you narrow down your virtual search, here’s your homework checklist:
- Assuming you’ve worked out your price range, start by making a list of your must-have features, noting what you’re willing to compromise on if everything else seems right.
- Search online for homes matching your criteria (and only matching your criteria, unless you’re a sucker for punishment).
- Make use of tools like Purplebricks’ daily Buyer Alerts, which send properties matching the criteria you select to your inbox.
- Be creative in your thinking: if you’re looking for a home office but a property you’re considering doesn’t have one, think about converting a spare bedroom or an area of the basement.
- Be sure to research the neighbourhood of homes that pique your interest by taking advantage of online tools like Purplebricks’ search map, which shows nearby amenities, or by using Street View in Google Maps.
- Drive past any top contenders to get a better sense of the area, and test the routes you’d expect to regularly take (for example, from the house to the school, to work, and to the grocery store).
Once you’ve got a firm grasp on which select homes fit the bill, you’ll be prepared to get in touch with your REALTOR® about arranging the showings. Here’s how to know if a house is “the one.”
Preapproval is more important than ever
With markets expected to stay competitive in 2021, it’s important that you’re prepared to act fast. Getting preapproved for a mortgage is essential to this process: not only will it speed up your search by giving you clear parameters of what you can afford, but you’ll be positioned to make an offer as soon as you’ve found the perfect home, rather than scrambling to get your finances in order while other buyers swoop in.
In fact, many REALTORS® currently require that buyers are preapproved before any in-person showings to avoid unnecessary risk. If the pandemic continues to impact real estate practices in 2021, it’ll be a step you can’t overlook. For more important financial considerations before buying your first home, read on.
Thankfully, there are a few factors making it a great time to get preapproved for your first home: the Bank of Canada forecasts that interest rates will remain at 0.25% through 2021,2 the five-year posted mortgage rate used in the “stress test” has dropped since the pandemic began to 4.79%,3 and buyers can still take advantage of the First-Time Home Buyer Incentive.
Though it’s impossible to say with certainty what will happen in the real estate markets through 2021, early indications are that buyers will continue to take advantage of favourable economic circumstances and maintain the strong demand for homes. If we’re not tasked with any unexpected economic changes, first-time homebuyers should prepare to hit the ground running in an energetic market.
If you’re planning to buy a home in 2021, trust the professional guidance of a local Purplebricks REALTOR®. We’re ready to help you buy your dream home while keeping your family’s safety a top priority using industry-leading technologies. Plus, when you buy with one of our agents, we’ll give you $2,000 cash back!* It’s how we’re making real estate better. Call 1-855-348-1820 to learn more.