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The home-buying process can feel overwhelming, especially for first-time buyers. It can be extra frustrating for buyers in Hamilton because a lot of the resources available for new buyers focus on buyer behaviours and market activity specific to the GTA. This is great if you want to buy a condo in CityPlace or a bungalow in Scarborough but what if you are buying in Hamilton? If you are a first-time buyer who wants to purchase a home in Hamilton then here is what you need to know:
Get Pre-Approved for a Mortgage Right Now
This is the most important step in the buying process. Why? Because you need to know your buying power. It is essential that you have a clear understanding of your budget before you get too far into the house-hunting process. Lenders have become increasingly cautious as interest rates have risen. There are so many factors that contribute to your ability to qualify for a mortgage (Are you self-employed? Are you a Canadian citizen? Have you changed jobs recently? Etc Etc). You need to know if you are able to buy a home and what you can spend on it before you fall in love with the perfect starter property.
You can work directly with your current bank or explore your options with a mortgage broker. We maintain a highly vetted list of People We Trust including a number of mortgage professionals within both mortgage brokerages and the major banks. Be sure to ask them these 10 questions before you commit to their service.
The Property + Price + Location Strategy
You need to determine how much it will cost to get the home you want in the area where you want to live. Here is how to do it:
- Property – in short, you need to determine your wants, needs, and dealbreakers. Not sure where to start? Make a list of everything you think you want in your first home. Take that list and organize everything into the following categories:
- Non-negotiable needs (dealbreakers)
- Things you want to have (but their absence wouldn’t be a dealbreaker)
- Things that would be nice to have but you’re not going to seek them out
- Location – where do you want to live? Are there specific neighbourhoods you like or are you open to finding areas with attributes you want? Our Hamilton neighbourhood guides can help.
- Price – take your list of non-negotiable needs and sort out what they cost in your desired neighbourhoods. Need help? A local realtor can give you the insight you need to understand the differences in pricing between various Hamilton neighbourhoods (it can be very dramatic!).
Analysis: Does this number fit within your budget? If not, then you need to change either the Property, the Location, or your Budget to avoid frustration and heartbreak.
Expect the Unexpected
Hamilton’s market in the first half of 2023 has been fascinating because we’re not seeing any particular trends dominating buyer and seller behaviours. Conditional offers are still being accepted while we’re simultaneously seeing the return of listings with set offer nights. The average days on market is historically a very valuable method to take the temperature of a market but it’s become an almost useless statistic in Hamilton because the range of data points is so wide. For example, freehold homes in one particular lower city neighbourhood have been selling on average after 21 days on market (over the past 60 days). However, only 6 sales were reported and the related days on market ranged from 6 days on the low end to 75 days on the high end. The average days on market doesn’t really provide any insight into the activity in that area.
What can you do as a first-time buyer looking to purchase a home in Hamilton? Get familiar with the process beforehand and be nimble when the time comes to buy. Start your buyer education with our First Time Buyer Guides and work your way up to our deep dives into Bidding Wars, Home Inspections, and Hamilton Market Stats.
Sort out your Deposit
When you buy a home in Ontario, you typically need to provide a deposit within 24 hours of your offer being accepted. In Hamilton, the sellers state their desired deposit on the broker version of the MLS listing (if the property is listed on RAHB). The deposit is typically around 5 to 10% of the purchase price. If your deposit money is in a virtual bank or RRSP, transfer it to an account you can instantly access. Note: a strong deposit can win a deal and sellers love to see a deposit in hand at the time an offer is submitted. Therefore, it may be in your best interest to provide the deposit with your offer so you won’t even have 24 hours to sort it out.
Be ready for the closing costs
You can read more about closing costs here – and make sure you’re familiar with all the first-time buyer incentive programs. Take comfort in the fact that you’re not buying in the GTA and therefore will only have to pay the provincial portion of the Land Transfer Tax.
Work with a local REALTOR.
If you’re thinking about buying a home in Hamilton, make sure you’re connected with an agent who understands the local market, prices, and housing stock. Just like a rural agent won’t understand the Toronto condo market, your Toronto agent may not be the best person to help you buy a home in Hamilton. Hamilton is quirky and there are areas where the values change by 20% or more within different blocks of the same street. You shouldn’t have to worry about whether or not you’re paying a premium price for a not-so-premium location.