We bought our first house – in rural Canada

Okay, the title of the post is a bit deceiving. It implies that we lived in a major city, and we made the crazy decision to buy a house elsewhere. We don’t. We live (very happily) in rural Canada, and so that’s why we bought a house here. If you haven’t read it, here’s the post on how we ended up where we are, and some of the wonderful benefits of not living in a major city.

The main point of this post is to give anyone considering immigrating to Canada (from South Africa, or otherwise) an idea on how property purchases work here, and the headwinds you’ll face if you do want to own your own house. And also to talk about how we pushed through and found ourselves in the fortunate position of owning one.

First, some background. Both CF and I wanted to own our house in Canada, and we’ve both been on the same page from day one about why we want to own the property we live in. Financially, it’s never made sense to us to pay our money into someone else’s asset if we have the disposable income to afford both a deposit and the monthly payments. And then from a lifestyle perspective, it grants us a level of stability we both want and need. We were in a privileged position in South Africa where we could own our house and – perhaps unrealistically – we wanted the same thing here.

We knew coming into our Canadian adventure that the housing situation would be different here, at least for a while. For one, we were gonna be moving around for a few months. For another, well, your rands don’t go very far in Canada, even if you have a lot of them. So you need to be earning in Canadian dollars to even have a hope of affording a property here. And then once we got here, we started to realise a few other things.

The first is that banks typically won’t grant a mortgage until you’ve been earning a salary in Canada for at least three months (or two years, if you’re self-employed). Then, as with South Africa, you will also have to pass a financial stress test, meet various debt load requirements, and have some form of credit history in Canada. Thirdly, all lenders will require a bare minimum of at least a 5% down payment on the property, if not 10% (as was the case for us). If your deposit is less than 20% of the value of the house, you’ll need mortgage default insurance which gets tacked on to the overall value of the loan.

In most cases, these items alone are impassable barriers to the average new permanent resident. But then, oh boy, then you start to compare the average income of $64,850 per person, per annum, to the median house prices in various areas in Canada.

The median house price for a single, detached house in the general area we live is $322,000 and it’s remained fairly stable over the past few years.

But what happens when you look at a major city (where most immigrants want to move), like Toronto:

Or Vancouver (per wowa.ca, because CREA don’t have a similar chart):

Or even Edmonton:

As it turns out, Canada is in the midst of a housing crisis. The country is not building enough housing to keep pace with population growth. You don’t need to be an economist to understand that insufficient supply to meet growing demand will force prices up. And whaddya know, that’s exactly what has happened in nearly all major cities. This obviously also has downstream affects on the rental market too – the average monthly rental across Canada has increased to over $2,100 per month. And that’s if you can find somewhere to rent at all.

Then if finances and house prices don’t get you, one quirk of rural living – combined with some questionable timing on our part – might. In smaller towns, there are fewer houses that go on the market because there are fewer houses in each town overall. This is no doubt blindingly obvious to virtually everyone reading this, but hey we’re both city-dwellers and that never occurred to us. Also I’d been keeping an eye on the market and there were usually a few houses available to buy in our town.

But then you need to take into account that fewer houses tend to be listed for sale in winter months in Canada (when we moved here), and also add the uncertainty over the interest rate environment in Canada into the mix. If you’re an existing homeowner and you have a mortgage at a 2% interest rate, why would you move houses and get a new mortgage with rates at 6% unless you absolutely have no choice but to move?

So we ended up with a situation where – for three full months – no houses appeared on the market to buy. The houses that did come up for sale (which were out of our budget or not suitable for various reasons) also sold ridiculously quickly – often in a day or less. We put out feelers with every estate agent in the area. We spoke to everyone in our community and asked them to ask their friends and family to tell us if they were considering selling a house. And we got mortgage pre-approval from one bank, with another in the wings, to ensure that we could move quickly when something did appear.

But after three months of waiting, something did. It’s not perfect (oh, the renovations we have ahead of us…), but it’s so very liveable. It’s also (much) more affordable than what we’re currently renting and is much smaller and fits the four of us better. So with the deposit paid, and the paperwork signed, we’re just waiting move in to our house. Most likely (if everything goes well) it will be in mid-March. We’re extremely excited (naturally) and a bit fearful (also natural). And we’re very grateful we were able to buy something that will be ours, and that we didn’t have to wait for many months more to find it. Let the (re)packing commence.