Niagara Real Estate Market Conditions: Pricing, Interest Rates and First-Time Buyer Tips

In this episode of the Niagara Real Estate Podcast, Joe Gonzalez sits down with Kevin Murphy, who has been selling homes across Niagara with Right Choice since June 2020. They talk about what the market really looks like from the front lines, why pricing a home properly matters more than ever, and what first-time buyers can do right now to get ready.

This episode was recorded in August 2023. The market lessons still hold, but prices and interest rates have changed since then, so talk to us about today’s numbers.

From multiple offers to homes that sit

Kevin listed his first home at Right Choice on his very first day, in June 2020. It went into competition and sold over asking with multiple offers, just as the market was starting to heat up. By 2023, things looked very different. A home that isn’t priced well can now sit for months, or not sell at all.

Who sets the market? The sellers who listen

When the market cooled, Kevin noticed a clear split. Homes priced sensibly in the mid-range were still selling, sometimes over asking. Homes listed well above their value sat for months. The difference usually wasn’t the house. It was how well the REALTOR® priced it, and whether the seller listened.

• Sell first, then maximize. Our first job when we list a home is to get it sold. Getting the most money with the best terms and protections comes next.
• Fear of missing out works both ways. Some sellers who listed low in 2022 missed the top, then over-corrected by listing too high, and got stuck.
• Marketing can’t fix the wrong price. We put a lot of work into marketing, but a home priced wrong won’t sell no matter how well it’s promoted.

Pricing a home in Niagara takes real work

There’s no shortcut to pricing a home in Niagara, and no app can do it for you yet. In South Niagara especially, you rarely get several identical sales on the same street. A proper price comes from comparing homes that are as similar, as close and as recent as possible, and that takes hours of analysis, not a guess.

Interest rates and what they mean for you

Rates climbed from roughly 2% to over 5% in a short period, which created a lot of uncertainty. Nobody has a crystal ball, but a few things are worth knowing:

• Renewals matter. Many homeowners who locked in at the bottom will renew at much higher payments over the next few years.
• A tougher market can be an opportunity. When everyone is rushing to buy, you’re doing what everyone else is doing. When fewer people are buying, buyers face less competition. If rates come down later, you may renew lower and benefit from rising values.
• Only take risks you can manage. Every market has pros and cons. Make sure the payment works for you today.

Advice for first-time buyers in Niagara

Kevin sees first-time buyers at 20 and at 40, and people with the exact same job where one can buy and the other can’t. The difference is usually how they manage money. His advice:

• Don’t buy a new car. Car payments are one of the biggest things stopping young buyers from qualifying. Kevin bought a new car when he was younger and says it delayed his first home by years. If you have one, consider selling it and buying used.
• Build your credit with two credit lines. Two credit cards used regularly and paid off in full every month will steadily build your score. Ask for limit increases when they’re offered.
• Get your debt under control. Pay down credit card balances before you apply for a mortgage.
• Keep expenses low and save your down payment. If you can live at home for a while, it can make a huge difference.
• Use the programs that fit you. The First Home Savings Account (FHSA), the Home Buyers’ Plan and your TFSA all give you room to save. Check which ones make sense for your situation.

Homes are still within reach

Prices are higher than they were a few years ago, but opportunities are still out there. Around the time of recording, the team sold a move-in-ready detached home with updates and a garage in Welland for about $370,000.

How Canadian mortgages differ

In Canada, most buyers choose a 25- or 30-year amortization with a five-year term, then renew. That’s very different from the 30-year fixed mortgages common in the U.S. Joe and Kevin both prefer a 30-year amortization when you can get it. Joe doesn’t believe in paying a mortgage down to zero, because that can leave a lot of opportunity on the table, but that’s a bigger conversation for another episode.

Borrowing from family, the right way

Kevin points out that most Canadians don’t lack places to save a down payment. They lack the money. One option many people overlook is borrowing part of a down payment from family who have built up equity in their home, and paying them interest. Your family earns a return, you get into the market, and everyone wins. There are a few details to work through, and we’re happy to help you navigate them.

Questions answered in this episode

Is it a buyer’s or seller’s market in Niagara?

It depends on the price. Well-priced homes still sell, while overpriced homes can sit for months.

Why does pricing matter so much when selling?

A home priced right out of the gate gets the most attention. Even great marketing can’t sell a home priced above what buyers will pay.

How can first-time buyers prepare to buy a home?

Avoid new car payments, build credit with two credit cards paid in full each month, pay down debt and save for your down payment.

Can I borrow my down payment from family?

Many buyers do, often paying their family interest. It takes a little planning, and we can walk you through it.

Ready to start your home search?

We’ll help you get pre-approved, prepared and ready to move when the right Niagara home comes up.

Call 289-276-1716 or see our buyer guide.