PRICES STILL DISCOURAGING FOR PRE-APPROVED FIRST-TIME BUY

The housing market has been a hot topic in Waterloo Region and across Ontario over the past few years.

From political debates, to soaring prices, and now rising interest rates, some Cambridge residents have been left wondering when they will be able to afford to purchase a home.

Danielle Johnson of Cambridge is one of those people. Young, with a steady job, says she has been renting for the past six years and wants to get into the competitive market as a first-time buyer.

"I was pre-approved in February 2021 for what I thought was a huge amount and I was ready to look at purchasing my first home," Johnson explained. "But honestly, I mostly just felt discouraged when looking because of the prices. I'm not willing to go $100,000 over asking price."

With prices increasing during the pandemic and bidding wars becoming the norm, it has been difficult for Johnson to know what fair value is.

"It has been hard to tell if homes are being listed at the true market value, or if the seller is looking for a bidding war," she said.

Is there relief on the way? According to the Cambridge Association of Realtors, the average price dropped 5.7 per cent in April from the month of March. Part of this could be attributed to the Bank of Canada raising its benchmark interest rate by half a percentage point last month.

Local realtor John Teixeira, of Re/Max Real Estate Centre, has been in the business for 15 years and he has seen a shift in the market over the past few weeks.

"The market has definitely cooled," Teixeira said. "The rise in interest rates and another potential raise coming in June is having an impact. From my experience, whenever the rates begin to go up the general population thinks they should wait."

To continue to make housing more affordable, the Ontario Real Estate Association is calling on the provincial parties to take action on the issue leading up to the June election. They would like to see the Land Transfer Tax rebate doubled for first-time home buyers, from $4,000 to $8,000, and the end of exclusionary

zoning to allow multiplexes to be built on lots traditional zoned for single family homes.

While these measures should help, Teixeira warns that going the route of another interest rate hike may not be the answer.

"I don't think the government should go after another increase in the interest

rates," he said. "We've already had one, and another could push us into a recession. That's what the stress test was used for, you would have to be approved for a mortgage at a higher interest rate and then you would get your mortgage at a lower one. If the actual rate is higher, it could cause problems."

The market has levelled off, but prices are still up 20.5 per cent from April 2021 to April 2022. For Johnson, that means she will continue renting for the time being.

"Renting has been OK. I have been in the same place for six years and my landlord has never raised my rent," she said. "But it is still disappointing and frustrating that I cannot afford to get into the market."

But that may change over the next few months.

STORY BEHIND THE STORY: With the provincial election looming, and the average prices of homes in Cambridge having dropped during the month of April, reporter Matthew Betts spoke with a hopeful first-time buyer and a local real estate agent to get a sense of the local challenges.