The Deutschmann Team’s Drew Dickinson was interviewed by Frank Lynn of CTV News about the upcoming changes being put into place by the Federal Government, impacting the minimum required down payment for certain Canadian homes. The change, taking effect in 2016, will see the minimum required down payment increase from 5% to 10% for homes with a purchase price greater than $500,000.
The change is intended to cool the real estate market in regions where prices continue to rise, like Toronto and Vancouver and aims to prevent would-be-homeowners from over-extending themselves.
What does this mean for the Kitchener/Waterloo market?
90% of the residential sales made in the current K-W market are below $500,000 and with plenty of beautiful homes that meet the needs of the first time home buyer available, we could see an influx of buyers who have been pushed out of the purchasing market where average home prices are above $500,000, like Toronto.
The remaining 10% of residential sales made in the K-W market typically deals with existing homeowners. These buyers don’t have to find something to buy, but rather are looking to be more particular about the home they want to live in; buying more out of want. They’ve built enough equity and had enough time to save for their down payment and the increase from 5% to 10% will likely have little effect.
The increased down payment is a good thing: it makes purchasers more accountable and it makes K-W an even more attractive place to buy a home!