Navigate Up
Sign In

Saving to buy a new home in Alberta

Despite Alberta’s sluggish economy, purchasing real estate is still a sound investment.

Albertans have been through challenging times over the last couple of years. The drop of global oil prices in 2014 resulted in massive job losses throughout the province and a sluggish economy. This was compounded by the devastating May 2016 wildfires in Fort McMurray.

Though the economy has slowed, economists have a positive outlook for our province’s future. And despite the economic downturn buying a home purchasing a home in Alberta is still not as daunting as it may seem. As one of the biggest financial decisions you’ll ever make, here are some things to consider as you save to buy a home in Alberta.

Real estate market remains steady

The real estate market remains constant and is well-balanced for both buyers and sellers, according to the November 2, 2016 market report from the Edmonton Real Estate Board (EREB). In fact, sales of single family homes have increased 7.1 percent, and sales of duplexes and row-homes have increased 17.4 percent over the last year.

"The housing market in Edmonton continues to experience relative stability, with increased sales and steady prices year-over-year for October," said Steve Sedgewick, Chair of the REALTORS® Association of Edmonton, in the EREB report. "We typically see the market slow during the colder months, so it is encouraging to see us moving into late fall with strong numbers."

In spite of the current recession in Alberta, housing prices have barely budged. This is good news for home buyers. According to a November 2016 report published in ATB Financial’s The Owl, in September 2016 the index price of a new home in Calgary was 109.2 and has raised slightly to 111.3 in January of last year. The index price in Edmonton has hovered around 91.1 for the last four years.

The fact that new house prices have remained so stable seems surprising, given the current economic state of the province.

"Part of the reason for such remarkable price stability is the fact that builders are adding fewer homes to the market," writes Nick Ford, Economist at ATB Financial and author of The Owl article. "This reduction of new homes coming onto the market is keeping pace with the reduced demand, which has kept prices more stable."

The steady real estate market should increase buyer confidence, make saving for a home more realistic and contribute to the future of the Alberta economy. However, home buyers should be aware of the new mortgage rules that were put in place in October 2016. Those with less than a 20 percent down payment will be required to pass a stress test and have mortgage insurance backed by the federal government through the Canada Mortgage and Housing Corporation. Learn more about Canada’s new mortgage rules and what the changes mean for home buyers.

Take advantage of the Home Buyers’ Plan

The Home Buyers' Plan (HBP) is a government program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plan (RRSP) to buy or build a qualifying home. You can use the HBP to purchase a home for yourself or for a related person with a disability.

To be eligible for the HBP you must be a first-time home buyer and have a written agreement to buy or build a qualifying home for yourself or for a related person with a disability. You must also live in the home for one year after buying it. Learn how to withdraw funds from RRSPs under the HBP.

Investing to save for a down payment on a new home

If you’re saving for a down payment, putting that savings in an RRSP will allow you to take advantage of the Home Buyers’ Plan. You can focus on putting as much as you can afford into your RRSP and you will benefit from the RRSP tax deferral which will increase your tax refund and allow you to save even more.

An important factor to consider is your timeframe. If you think you could safely save enough for a down payment in less than two years, you should use a savings account; ideally a tax-free savings account. If it will take you two to five years, investing in a conservative mutual fund through RRSPs would be a smart idea. You can get more information on this and professional guidance by speaking with an ATB Financial Specialist.

Keep an eye on interest rates

Canadians have been sitting on the edge of their seats wondering if the recent US election win for Donald Trump will affect the economy here in Canada. Because of Trump’s bold plans to jump-start the slow US economy by increasing spending on infrastructure, major investors are worried about inflation and have started to drop bonds. This could cause interest rates to rise, including mortgage rates in Canada.

An article in the Globe & Mail suggests home buyers and homeowners start to strategize. It isn’t clear how much rates will rise or for how long, but Trump’s economic policies could create uncertainty in the real estate market in the future.

Mortgage Specialists at ATB Financial are knowledgeable and experienced, keeping a close eye on the economy and mortgage interest rates. Consulting with a professional will ensure you are finding the best mortgage for your specific needs at the best available rate and that you will be prepared if your rates increase.

If you’re buying a home, get in touch with an ATB Financial Mortgage Specialist.​​​​

ATB Financial

Share this article:

GlassdooreSSENTIAL Accessibility™Diversity and Inclusion

About ATB | Contact Us | Find a Branch or ABM | Current Rates | Privacy and Security | Legal | Code of Conduct | Site Map | Supplier Resources

©ATB Financial 2019. All rights reserved. ATB Financial is a trade name/registered trademark.

ATB Financial