Although first-time home buyers are a growing component of this summer’s strong national housing market, they must pay significantly more for the same or a smaller home than what first-time buyers could afford ten years ago.
The low interest rates and regulations that allow zero down payment financing have encouraged first-time buyers into this summer’s market in increasing numbers across the country.
Today’s first-timers want more features in their homes, have different attitudes about home ownership and must employ different purchasing strategies to satisfy their preferences than first-time buyers of ten years ago.
Markets are toughest for first-time buyers in the largest cities, such as Toronto, Vancouver, Montreal and Calgary.
The most accessible markets for first-time buyers this summer are in Saskatchewan, Manitoba, Atlantic Canada and the smaller cities of Ontario and Quebec.
Traditionally, first-time buyers have purchased older homes with the intention of fixing them up. Now, because prices are so much higher in most markets, first-timers simply can’t afford an older home because they can’t afford repairs or renovations. Instead they stretch for new condos or townhouses.
Even in markets where they can afford to buy and renovate an older large home, many of today’s first-timers are opting for newer detached homes or condos.htm”target=”_blank”title=”toronto condo” >condos because they want to focus their time on career advancement and recreation instead of home improvement projects.
More and more we are seeing first-timers buy new condos with desirable locations and amenities instead of older large detached homes needing upgrading. Many first-timers today want to be skiing or golfing, not drywalling and painting.
Changes to the financing rules by Central Mortgage and Housing Corporation (CMHC) means that first-time buyers are buying homes with 0-5% down payments, something that was not possible until recently. Although prices are much higher than ten years ago in most centres, first-time buyers are taking advantage of this change to buy, even if it means stretching their budget a little more.
In addition, interest rates continue to drive people to the market. Rates may increase between a quarter and a half of a percentage point later this year, but they will still be attractive. More and more Canadians can demonstrate to lenders that their jobs are stable and that they can qualify for mortgage payments – and so the number of first-time buyers continues to increase.