When you decide to buy your first home, you may come across a number of terms and conditions you’re not familiar with. While you may have a general idea of what an inspection is, maybe you’re not sure why you need one or how it’s different from an appraisal. To keep it simple, here’s an explainer of each one and what they mean for you as a homebuyer.

Home Inspection

Once you’re under contract on a home you’d like to buy, getting an inspection is a key part of the process. An inspection gives you a clear idea of the safety and overall condition of the home – which is important for such a big transaction. As a recent Realtor.com article explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”

If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. And don’t worry – you don’t have to go through that process alone. Your real estate agent will be your advocate and negotiate with the seller for you.

Home Appraisal

While the inspection tells you about the current state of the house, an appraisal gives you its value. Bankrate explains:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal protects you from overpaying and the bank from lending you more than the home is worth.

And if there’s ever any confusion or discrepancy between the appraisal and the agreed-upon price in your contract, your trusted real estate professional will help you navigate any additional negotiations to try to close the gap.

Bottom Line

The inspection and the appraisal are different but equally important steps when buying a home – and you don’t need to manage them by yourself. Connect with an agent today so you have expert guidance from start to finish.

27% of renters say they are planning to buy a property within the next two years

As affordability challenges and housing supply shortages persist in Canada’s real estate market, renters may be feeling that their transition from tenant to homeowner is taking longer than expected. For the one third of Canadians who rent, many are still eager to own a home in the near future, despite the hurdles of high borrowing costs, large down payments and tight competition in the market.

According to a recent Royal LePage survey, conducted by Hill & Knowlton,1 27% of Canadians who currently rent their home say they plan to purchase a property in the next two years. Among those aged 18 to 34, that figure jumps to 40%. Meanwhile, 69% of renters say they do not plan to buy a home in the near future. Among them, more than half (54%) do not feel their income will be sufficient to afford a property in the area where they wish to live (61% among respondents aged 18 to 34).   

“The rental sector is not immune to the significant affordability challenges stemming from Canada’s acute housing shortage. High mortgage rates have made it difficult for many to purchase a home, forcing some to move into, or remain longer than planned, in the rental market,” said Phil Soper, president and chief executive officer, Royal LePage. “Despite a short-lived decline in prices and demand for rental units during the height of the COVID-19 pandemic, the available supply of rental properties in most major markets remains ultra low.” 

Nearly a third of renters contemplated home purchase before signing their lease

Before signing or renewing their current lease, 29% of Canadian renters say they considered purchasing a property. Among them, 41% say the lack of a sufficient down payment led to their decision to rent instead. 

When asked about the motivating factors behind their decision to continue renting rather than buy, approximately one third of respondents said they were waiting for interest rates (33%) and property prices (30%) to decrease. Twenty-two per cent said they are continuing to rent while saving for a down payment, and 20% said they did not qualify for a mortgage. Respondents were able to select more than one answer. 

“While a third of Canadian adults are currently renting, and there are families who are perfectly content doing so, the desire for home ownership remains strong among a large portion of this segment of the population. Our latest research reveals that a material number of renters wish to transition to home ownership. Understandably, the greatest barrier to entry is the ability to drum up the initial capital for a down payment,” continued Soper.

For some Canadians, rental prices eat up 50% of take home pay 

Nearly four in ten Canadian renters (36%) spend up to 30% of their net income on monthly rental costs. Meanwhile, roughly the same amount of renters (37%) spend between 31 and 50% of their income on rent, and 16% spend more than 50%. In Canada’s most expensive housing markets, Vancouver and Toronto, the proportion of renters who spend more than half of their income on rental costs increases to 27% and 19%, respectively. That figure dips to 10% in Montreal. 

According to the latest Rental Market Report by the Canadian Mortgage and Housing Corporation (CMHC), the average rent nationally for a two-bedroom unit in October 2023 was 8.0% higher than a year prior.2 Vacancy rates sat at 1.5% and 0.9%, respectively, for purpose-built rental buildings and condominium apartments. 

“From coast to coast, Canadians are struggling with housing affordability in the wake of one of the most aggressive interest rate hike campaigns in history. Across many regions, rental demand vastly exceeds supply, making affordable housing a challenge. The housing industry and government must collaborate on innovative solutions to increase inventory, including rentals, and support those most impacted by these escalating market conditions,” concluded Soper.

Here are a few highlights from the Royal LePage 2024 Canadian Renters Report:

• Of renters who say they plan to buy within the next two years, half (50%) say they will have a down payment of less than 20%

• When asked how they will come up with their down payment, 53% of respondents said they will use savings accumulated over the years

• 44% of renters planning to purchase in the next two years believe they will be able to afford a home in their current city of residence, while 37% do not 

• In British Columbia, 25% of renters spend more than half of their net income on monthly rental costs, well above the national average of 16%

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