Mortgage rates are at or near record lows right now. Indeed, they're so low (and the housing market is so hot) that policymakers are starting to take note. There are discussions from the current Federal government about what policy measures to put in place to prevent prices from rising to unsustainable levels. Assuming the government follows Ontario and BC's laws, these measures will invariably involve foreign ownership taxes and taxes imposed on vacant housing.
Regardless of what happens in the future, for those looking to sell pre-construction homes now, these record low rates have three vital benefits that you need to know!
Record Low Mortgage Rates Are Driving Increased Buying
The highest demand within Canada right now is suburban housing. Suddenly unburdened by geographic restrictions due to work, Canadians are looking to leave the more congested, pricier cities like Toronto and Vancouver and settle in smaller cities like Halifax. According to the CBC, Nova Scotia and New Brunswick had the highest year-over-year increase in average house price, comparing September 2020 to September 2019. This significant increase shows the demand that people have for less expensive, less chaotic environments.
Of course, this buying activity is good news for most pre-constructions. Many builders pick a part of town that isn't in the downtown core, so if you have a pre-construction out in the suburbs, the combination of the pandemic and the low-interest rates mean just one thing: a lot of potential interest in your property!
Buyers Can Buy Bigger for the Same Amount of Money
At the time of this writing, it is possible to get a 5-year fixed mortgage rate for as little as 1.59%. To put how low that is into context, at the end of 2019, the average 5-year rate was more than double at 3.24%. Or, looking at it from the prospective homebuyer's eyes, back in 2019, if you wanted to buy a home for $1,000 a month, you could borrow up to $205,428. Now, if you're going to buy a house for $1,000 a month, you can borrow up to $247,415 (assuming they get the best rates).
For pre-constructions, this means that buyers will probably have more flexibility. Now that they can afford a better home for the same monthly payment, it's possible to promote more add-ons, upgrades, and even more space to prospective residents.
Buyers Are Anxious To Lock in a Purchase
Even though interest rates might be low right now, it's no secret that the flurry of homebuying activity has caught the eyes of regulators. Everyone expects that there will be measures (probably in the form of higher interest rates) designed to curtail the market.
Therefore, buyers are in a rush to lock in their mortgages and rates now. If you're selling a pre-construction, buyers may not be able to secure today's rates for closing. Still, today's low rates may make it easier to qualify for a pre-approval letter or, depending on the financial institution, the buyer may be able to get a guarantee letter locking in this rate. Either way, with rates likely on the rise soon, marketing your pre-construction with this perspective in mind might pay off well, especially in the short term.
Lower Mortgage Rates Present Many Opportunities for Sellers
Whether you're looking to sell pre-construction housing, homes where construction has already started, or you're selling a resale home, the record-low rates present plenty of opportunities for buyers. They can secure financing more efficiently, and sellers can get top dollar for their property.
Of course, virtual tours and renderings are still an effective way to market these properties (especially in a pandemic!). At Nanuk Technologies, we create these digital representations so your buyers can have confidence when buying. Let our team of experts give you the digital media you need to succeed. Contact us today