What’s a realistic budget for buying a home?

Housing prices are on the rise almost everywhere in Canada. Even as price increases are slowing down in many parts of the country, homes are still becoming consistently more expensive. How much should you expect to pay for a home in Nova Scotia? After all, this province has more affordable housing than many other provinces. It’s important to see how the market is shaping up in Nova Scotia before you decide what a realistic budget might be for your next home, or your first home. Here’s what you should expect to spend on a house in this province. 

Housing prices in Nova Scotia

First, let’s examine the average house price in the province as a whole. According to the Canadian Real Estate Association (CREA), as of August 2021, the average price of a home in Nova Scotia was $350,463. This is an 18.2 per cent increase from August 2020. In terms of the dollar value on all home sales, in August 2021 it was $477.3 million, up 5.1 per cent from 2020. However, the number of new listings has decreased 15.2 per cent. Home sales are declining, though they are still above five and ten year averages for the province. It’s safe to say overall, home prices are increasing while sales are decreasing. 

Housing prices in Halifax

Now, let’s focus on the main hub of Nova Scotia. Halifax-Dartmouth is the most populated and most pricey region in the province. In August 2021, the average housing price was $468,790, well above the provincial average. In fact, 729 of the 1,411 listings from August were in this region. This gives you an idea of what a realistic budget should be for buying a home in Nova Scotia, specifically within Halifax-Dartmouth.

Housing types

These averages take all housing types into consideration, but of course, different property types will have different price ranges. Nova Scotia has everything from one bedroom condos to huge detached houses, so depending on what you’re looking for, your price range will vary. The Halifax condo market itself has a big range, for example. According to Halifax Condos, The average price ranges from $293,799 to $385,800, depending on the location within Halifax, plus the size of the condo. Meanwhile, the median sale price for a single detached home in Halifax-Dartmouth as of Q2 in 2021 was $455,000. Creating a realistic budget for yourself will largely depend on the housing type you’re looking for.

Costs to consider

Down payment

When you’re thinking about your housing budget, the most obvious upfront cost (and the biggest) is your down payment. Your down payment can be as low as five per cent, as long as the purchase price of your home is under $1 million. If your down payment is below 20 per cent, you must purchase mortgage default insurance. This is an extra fee rolled into your monthly mortgage payments to protect the lender, since they are financing a bigger mortgage. If you’re able, paying a 20 per cent down payment now can save you money down the road, because you won’t have to pay for mortgage insurance. Of course, this is all about creating a realistic budget for yourself, so you need to decide what amount you can contribute to a down payment.

Monthly mortgage payments

Your monthly mortgage payments will vary depending on your contract and term length, and of course, the purchase price of your home. According to Statista, average monthly payments tend to hover around $1,200. This is actually on the lower end compared to other major Canadian cities. For example, in markets like Toronto and Vancouver, this average approaches $2,000 per month. Of course, your mortgage payments might be higher or lower, depending on your payment abilities and whether your contract has any prepayment options. 

Property taxes

Home owners pay property taxes to contribute to things like construction and fire services. These taxes are determined by the value of your home, so the higher the value of your house, the more tax you pay. The tax is calculated as a percentage of your home’s value, and you pay that percentage. In 2020, Halifax property taxes averaged 1.04 per cent of a home’s value. This may not seem like much, but on a $350,000 home, that equals $4,900 in taxes. It’s important to take this into account when working on a realistic budget for your home.

Property insurance

Finally, you will need to purchase property insurance before a lender will provide mortgage financing for you. In case your home experiences a fire, flood, or any other damages, lenders need to know it’s insured so they don’t lose out on the value of your home. Property insurance protects both you and the lender. The cost of this depends on the value of your home and your own personal belongings, but the average in Nova Scotia is just under $800 per year. It’s also important to know about these other closing costs to help you create your budget.

Finding a realistic budget for a home can be tricky, as prices keep changing and data quickly goes out of date. You can consult a broker to help you determine a budget based on what’s current and what’s right for you. Brokers can help you find an accurate budget and a lender for your mortgage, and they will be your guide every step of the way. 

If you’re preparing to buy a home, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.