03 Nov Real Estate Market Research – Your First Step to Buying a House
You are ready to start shopping for a house, Congrats! But before you do, it is paramount that you perform preliminary real estate market research to establish what kind of properties you should be looking at. Make sure you are prepared before you start looking around, so you can find a house that will be a perfect fit for your life AND your wallet!
Budget - Can you afford it?
Look at your entire budget to establish what type of house you can afford, or if you can even afford one at all. Take into account every monthly and yearly expense in contrast to your household income. If the cost of owning a home consumes more than 30% of your income before taxes, it may not be affordable for you.
If you are thinking about buying a house, the very first step you should take in your initial real estate market research is determining where your credit score is. Knowing your credit standing allows you to address and remedy any concerns. Doing so before apply for a mortgage will help you get approved faster and for a potentially better interest rate. If you don’t know what your credit score is, you can use a variety of different credit reporting bureaus or speak to a financial advisor.
Before you can acquire a mortgage, you will need to have a down payment saved. There are other options out there depending on if this is your first home or what type of mortgage you are interested in. Don’t worry, saving for a down payment doesn’t have to be scary – check out our post about how to save for a house!
Mortgage and Interest rates
Naturally, when determining what will be reasonably affordable for you when buying a house, the first thing to look at is the mortgage itself. Look at the total mortgage amount you can pay, what the amortization period you can manage, the current interest rates and how this impacts your monthly payments. This is your starting point to outline what monthly budget is within your reach and will dictate the price range you should be shopping for.
When taking a look at the purchase price of a home, you will need to consider the cost of a mortgage insurance payment. Depending on the percentage of your down payment, the loan-to-value ratio will dictate whether you pay 0% – 4% for mortgage insurance rates from the Canada Mortgage and Housing Corporation.
With homeowner insurance, rates vary based on various factors including (but not limited to) location, property value, coverage type, and the company you choose. Do your research to find the best solution for you. Based on a survey, the average monthly insurance payment in Edmonton is $67, which can be a good starting point for factoring payment into your initial budget determination.
Be sure to include your property taxes in your real estate market research monthly payment calculations. Many people forget about these when working out how much they can pay on their mortgage each month, but you will have to pay them so it is best to factor them in right off the best to set up more realistic expectations. Tax rates are dependent on the value of the property, including the house and land, and typically fall around 1%. In Edmonton, the current rates are 0.94% for residential and 1.04% for multi. When you are using an online calculator, it is important that you make sure it is representing your local rates for an accurate assessment.
Maintenance and repairs
If you are purchasing an older home, you will need to account for potential costs of keeping up the property into your budget. Whether you decide to renovate or perform general maintenance as it becomes necessary, you should be be looking at these before into the home cost right off the bat. Look at the cost of replacing old appliances, roofing, and HVAC systems to prepare yourself for the unavoidable expenses that you might have for an older property. You can also look at the cost of potential aesthetic or person preference upgrades as well, but if you are planning on jumping on a full facelift to customize the house right away, then you won’t need to include this in your initial budget.
Other fees and considerations
There are additional fees your should consider while building a preliminary budget in you real estate market research that occur during the purchase of a house. These include closing costs (appraisal, application, credit report). In addition, you can look at potential tax exemptions and deductions you may be eligible for to bring down the over all cost.
What are you looking for?
After you have established what you can comfortably afford and reasonably expect to be qualified for, the next step in your real estate market research will be to decide what you want in a house. Figure out what are your must-haves, general wants and what are going to be absolute deal breakers for you. This way, when you are shopping around for the perfect house, you will a predetermined set of criteria that will help keep you on the right track.
Consider where you would like to live. This includes many factors, but the first step is looking at a general area of Edmonton or a few neighborhoods you would prefer. Factor your regular commute into the equation, accounting for both time and money. With the cost of gas being what it is, you want to look for an area close to work or with easy access to save on miles, time and dollars. Additionally, if you are a parent or thinking of starting a family, you may want to pay attention to school zones, nearby parks, or possible day cares.
These are a couple of the primary things to look at when deciding the location you wish to buy in, but there are many more that may be important for you or your family. Community engagement, shopping centers, crime rates, property values or other nearby amenities like dog parks are things that can be more or less important to you.
If you think you have a couple good areas in mind, do your homework first. You can search up neighbourhoods to view data points and reviews. Visit the community website to get insights and general information to help you determine its suitability. Read reviews for the schools and daycares. Check out neighbourhood statistics online such as crime reporting or property value trends. If you are still unsure, you can get out and take a walk around the neighbourhood! Walk the paths, go to the park, talk to neighbours – all of these things will help you decide if this neighbourhood will be a good place for you to purchase your next home.
Property & House
Beyond location, you should be thinking about what type of property and house would be the most appropriate for your needs. Are you looking for a beautiful view or a larger lot? Is a yard with a garden important or would you prefer a big deck for hosting? Are you looking for a smaller cozy bungalow or did you want a larger house with a lot of extra space? Is a garage a necessity for you or did you prefer a large driveway? Also, think about any design preferences or specific lifestyle needs you may have. You may want a unique Victorian style home with lots of intricate details that would require a lot of maintenance. If you are looking for less upkeep, you may want something simpler.
Prior to beginning your search, you should establish exactly what you want in the home including other elements like the ideal floor plan, square footage and rooms. Decide how many bedrooms and bathrooms you will need. If you have any other rooms outside of the standard bedrooms such as a rec room, mud room, laundry dedicated room, gym, or a home office. These should be included in your wants as well. Figure out if a walk-in closet or a kitchen island is more important. Decide if you require natural lighting that would mean big windows or if you prefer having high ceilings. These things are all unique to each person, but you should make sure you know exactly what you want or need. It is important to keep in mind that, you may not find a house that is exactly what you had pictured, so rank these things in importance. Separate the absolute must-haves from the wants, which will help you be more realistic when you are browsing properties.
After creating a thorough wants and needs list for your real estate market research, dive into the cost of achieving the things you can’t find. If you find the perfect house, except it is missing the kitchen island that you put high on your wants list, how much would it cost to renovate? What is the price of getting the perfect en-suite bathroom for your primary? Can you make these essential renovations and still stay within the budget you previously outlined? Are you even willing to do renovations at all or will the dream home need to be move-in ready? If this is the case, you may need to sacrifice a couple more things off your wants list.
Keep in mind that, while there may be some things that you think you need or can’t stand to have, it might be worth it to live with something that is not perfect for a short period of time until you can reasonably afford to change it. You may come across wall paper you hate or are firm about having a smart thermostat. These things can be more fixable than the location or the size of the property. That being said, don’t buy something that is beyond what you can handle financially or something you won’t have the means to fix.
What else should you do in your Real Estate Market Research?
After you have figured out your budget and what you want in a house, you should make sure you are prepared to buy. Take a look at the market status to see if it is the right time for you to start looking for a home. Picking the wrong time could mean you are paying much more than necessary for a house or there may be too much noise and no substance.
You will also want to establish your motives and future plans. How long do you plan on staying in this house? Will you be selling when you are older or will you hand it down?
Who will you hire?
Within your real estate market research, you should be taking the time to do homework on any resources you may need. Take the time to find the best REALTOR® for your needs, the market is saturated so you should make sure you find someone who will look out for your best interests. Finding a good agent will help you match your criteria to homes that will be a good fit and will know how to navigate the market. Look into Edmonton real estate lawyers, mortgage brokers, home inspectors and any other professionals that you may want to hire to achieve your needs.
It is important to be well informed and properly prepared before you start the search for your dream home so you can make appropriate decisions and avoid impulsive decisions. Take some time to determine if a new home is actually right for your, what you want and what budget will be affordable for you. Once you have done your real estate market research, you can start browsing for homes! Check out MyHomie Buyers App to start looking and get customized results tailored to your like history or talk to a Keylo REALTOR® today!