How Much Home Can You Afford?
Big city real estate in Canada has been on a seemingly unstoppable upwards trajectory. Cities like Toronto and Vancouver have been riding at the top of this wave and are currently seeing the highest average home cost in Canada, by a long shot. The average price point for all types of homes in Toronto is $758,369 as of October 2016, whereas the average price point for all types of homes in Vancouver is a whopping $919,300 for the same time period. These both mark massive increases when compared to October of last year, and the average cost of home has been accelerating at a rate that far exceeds that of inflation.
In response to the consistent increased pricing across all major Canadian markets, Canada just released new mortgage rules meant to help tame the market. These new rules will essentially limit the amount of home someone can purchase by implementing a stress test designed to predict whether or not a potential home buyer will be able to pay off their lone in the event that interest rates rise, or that they encounter personal financial hardship. The test will require potential home owners to qualify at the Bank of Canada’s posted rate of 4.64 percent rather than the typical 2.5 percent being offered. As a result, people will essentially be able to afford less property than they would have without the stress test. In theory, this is meant to prevent Canadians from taking on too much debt, and to prevent our economy from entering a financial crisis. The idea is that this will even out the market over time.
Ok, so what’s the issue? The issue is that home prices are already out of control, and now that new home buyers can essentially afford a lot less property due to the stress test, it’s almost impossible for many to buy in the city. On paper, this will change with time. But so far, that’s just on paper; despite the new mortgage rules, Toronto continued to see an upwards trajectory in the month of October. So for the time being, buyers may need to look outside of the city to find their dream home. Unfortunately, there don’t seem to be many online tools available to aid a home buyer in this process…until now.
How Much of a Home Can You Afford?
I am the CEO of Agent Locator, the biggest lead generation company in Canada. We have a wealth of incredible tools to offer our clients, and the list of features is set to continue to grow. Our goal is constant innovation, and with that goal in mind, we will be releasing a new landing page that will help home buyers to find the best home in the best location that they can realistically afford. Buyers in Toronto are struggling with home prices and have been looking outside of the city as a result. The new tool will allow buyers to find homes based on how far they are willing to drive to the office. The feature is currently in its developmental stage, and is set to be released by the end of 2016.
How Will it Work?
The finalized process is still being tweaked, but the idea is to ask a variety of questions that will allow us to present options to the buyer. For example, we will ask the buyers:
How much can you afford to spend on a home?
What is your office address?
What time do you have to be at work by?
How long are you willing to drive to work?
Do you want to avoid Toll Routes?
Once this information is submitted by the client, the system will use a mathematical algorithm alongside Google Maps live traffic data in order to figure out how far outside of the city the lead can look for a home. At this stage, we already have part of the code developed, and we’ve been testing the accuracy of the map polygon. I’m excited to say, it works like a charm.
A feature like this will help agents and home buyers in the big cities where the cost of homes has gotten way out of control. Now, Agent Locator clients will have yet another tool at their disposal that will not only help them to capture fresh new leads, but allow them to provide their clients with a unique and helpful tool that is truly one of a kind. I couldn’t be more excited to release this feature to our loyal and incredible client base.
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