Mortgage brokers say 2023 could be an ugly year for some homeowners, who have become mired in the monetary vice grip of rapidly rising interest rates and continually falling home prices.
It follows years of frenetic activity in a red-hot real estate market that saw the price of an average London home peak in February 2022 at $810,000. Prices have fallen every month since to rest at $612,770 as of last month. What is worse, December 2022 saw only 299 sales, the lowest number recorded for the month in a decade.
At the same time, interest rates have risen steadily, from 4.94% for a 5-year term in 2020 to 6.99% in 2023 for the same mortgage. This has forced many prospective buyers to put off home ownership and squeezed those who already own.
What’s worse? These higher mortgages, lower home prices, and decreasing home sales are not only affecting a few house markets in the GTA. Falling home prices is a trend seen in many of Ontario’s major housing markets over recent months. As Ontario’s housing market cools, sales activity has also tapered off. Home sales in Toronto are down by 48% year-over-year while Ottawa’s housing market is seeing a 30% decrease in sales year-over-year. Activity in Hamilton’s housing market has also slowed, with Hamilton’s sales activity down 47% year-over-year. Mississauga home sales are down 48% year-over-year and home sales activity in Brampton is significantly down by 58% compared to last year.
To put it into perspective, let’s say you purchase a $1,000,000 home with a 20% downpayment and take out an $800,000 mortgage. Amortized over 25 years, here’s how fixed-rate mortgage payments vary depending on the interest rates.
|Interest Rate||Mortgage Payment|
Although these numbers may seem discouraging, there are other solutions for those struggling with these mortgage rates. Rather than spending even more money to fix your property, then be given no exact timeline on when a buyer will come and have to pay thousands in commissions; why not contact a cash buyer company?
Honest home Buyers is a great example of a company that will simplify this process and save you time and money. Although not the perfect solution for every situation it may just be the one you need. You will immediately know the amount you are receiving as well as the closing date so you aren’t left in limbo wondering when your house will sell. Direct sales are becoming increasingly more popular; however, not all cash buyers are the same. Make sure you do your homework on both the local market and the buyer you are working with. A direct sale may not offer full price, but for some people, the amount saved on repairs, realtor commissions, and wasted time more than makes up for the difference in price.
- Completely tailored to your needs closings (whether short or long you decide how fast we close)
- No agent commissions
- 100% Free no commitment offer
- No renovations or repairs needed
In times of need, it is good to know we have other options. Rather than feeling overwhelmed by increasing mortgage rates and fearing mortgage renewals. You lose nothing in hearing an offer from a Cash Buyer. Long gone are the days when people would battle in endless bidding wars for homes. Perhaps the best, most time-effective solution may be closer than you think.
Do you want to sell your house? Find out what we can do for you! Send us a message or give us a call today Honest Home Buyers!