First-time homebuyers are feeling the heat in Canada’s white-hot housing market, says a new Royal LePage and Sagen joint survey, which found 62% of entry-level buyers are worried about saving enough for a down payment.
“Although COVID-19 has impacted first-time buyers across the country, many have been able to save and buy their home sooner than expected,” said Stuart Levings, president and CEO of Sagen, Canada’s largest private mortgage insurer. “The hurdle causing anxiety for first-time homebuyers is saving for a down payment in an environment of rising home prices in many parts of the country. While some have parents who can step in, many do not and they are struggling to get into the market.”
The survey found that 75% of first-time buyers in Toronto were anxious about saving for a down payment, up from 68% in 2019, while 69% of respondents in Vancouver felt similarly, increasing from 58% two years ago. In Montreal, Canada’s second-largest city, 63% of survey respondents were nervous about having enough money for a down payment, rising from 60% a couple of years ago.
Anna Depalma, a real estate broker with Century 21, frequently works with first-time homebuyers and says she has to constantly reassure them that not having a full 20% down payment isn’t the end of the world. Moreover, she says there are ways for buyers to work within whatever constraints they might have.
“First-time buyers have to look well below what they’re approved for because homes go for significantly over asking,” Depalma told CREW. “I try to explain to them that wants and needs are separate and that their first home isn’t going to be their forever home, so focus on getting into the market first and building equity. If there is minor work that need to be done to the home, it might be worth looking at that over a brand new home where you have more people competing for it.”
Despite their disquiet, first-time buyers have an advantage that wasn’t available to them before the COVID-19 pandemic began. Working remotely permits them to move further afield where the mortgage money they’re qualified for goes further.
“They can find more in their price range,” said Depalma. “The biggest issue I’m seeing is when people are locked into a certain area and they can’t go too far. Depending on location and prices, it can be tough to get into certain areas. But if you move 15-20 minutes further, you can probably get into that area because you have more options, so I try to get people to understand that they shouldn’t be tied to certain locations. Location is the one thing with first-time buyers that’s the biggest struggle.”
She added that they must accept making sacrifices to get on the housing ladder.
“Understand you’re building equity on this. What you need versus what you want are two separate things.”
When you flip houses, you are not usually intending to live in the house; rather the strategy is to sell the property as fast as you can so as to avoid paying taxes and other expenses on the property. While there will obviously be initial costs that you will need to budget for, house flipping can be done with few resources and little experience.
For Real Estate News and Market Updates & VIP Access to Exclusive Real Estate Investment Opportunities
If you’re a newer house flipper, you have probably heard about the 70 percent rule. Here’s your guide to the investing rule that can prevent you from spending too much money on an investment.
“Sign up for our daily newsletter to get the latest news, updates and offers delivered directly to your inbox.”
Designed to offer readers accurate, cutting-edge information to guide their investment decisions, each issue of Canadian Real Estate is filled with informative articles on a broad range of topics.
© 2021 Canadian Estate Wealth. All Rights Reserved by Merged Media