For Keira Azzopardi and her fiancé Stephen Monus, house hunting in Toronto was a mix of hope, excitement and stress.
The couple, both in their early 30s, have been looking since last summer. They made offers on five homes but were outbid each time, sometimes by $200,000 to $350,000 over the offer.
“Although we have been looking at properties for a long time and are aware that some of the neighborhoods we are looking at come with some premium attached, we are still sometimes blown away by what the home ends up selling for,” Azzopardi said. “Even our broker was shocked in some cases.”
With a real estate market this spring seeing falling prices, declining sales and more choice as properties in many parts of the country stay on the market longer, it appears first-time buyers have the best chance in years of climbing the first rung of the property ladder.
But despite the introduction of the First Home Savings Account and GST/HST rebate for first-time home buyers on new homes valued up to $1 million, a higher home purchase plan withdrawal limit and provincial incentives, real estate agents and brokers across Canada describe the mood among first-time buyers like Azzopardi and Monus as cautious.
“I think buyers are more cautious about competing than they used to be,” said Tanya Colbo, a real estate agent with Royal LePage Atlantic in Halifax. “I think they’ve heard these stories about 2021 and they’re competing like crazy. Some people felt like they paid too much for houses and then the people who want to sell now are stuck because the market has calmed down a bit.”
Still, declining sales and falling prices have created an environment in which first-time buyers have more influence over negotiations and conditions such as home inspections.
“It really makes a big difference because they have the opportunity to take a look at what’s on the market and have time to think and do due diligence that hasn’t existed in our market for a long time,” said Rhiannon Foster, a Vancouver-based real estate agent with Century 21 In Town Realty.
Real estate prices are just one factor in the high cost of living that weighs on many Canadians, said Kori Marin, co-founder and broker at Fox Marin Associates in Toronto.
“I don’t think it’s just about housing anymore. I think it’s about overall living conditions,” Marin said. “Going to the grocery store is insane. Going out to dinner is astronomical. Every time you pay for something, (for example) property taxes, property transfer taxes, you get insulted left, right and center.”
A combination of changing priorities and pricing pricing out of the market is causing the profile of first-time buyers to become older, said Ralph Fox, co-founder and registered broker at Fox Marin. He said there were a “large number” of people seeking more flexibility in their lifestyle and questioning the traditional route of committing to a mortgage from a young age.
“We’re seeing a lot of very high-income people, young people making $200,000 or $300,000 a year, choosing to rent,” Fox said. “This is something we wouldn’t have typically seen a few years ago, and it’s something that’s becoming more and more talked about that never really existed until this recent downturn.”
Many real estate experts said saving for a down payment is the biggest hurdle for first-time home buyers. Financial support from the so-called “Bank of Mom and Dad” is more common than ever, especially in expensive markets.
“I don’t think it’s going to go away,” said real estate agent Steve Saretsky, owner of Saretsky Group in Vancouver. He estimates that about 90 percent of the buyers he works with receive financial assistance. “Even if prices corrected 10 or 15 percent from here, which would be about 30 percent below peak, I still think you see the inability to save the down payment as the biggest challenge.”
For Julia Coffin and her husband Eric, the down payment is the biggest obstacle to future home ownership. The couple currently rents a home in Whitby, Ontario, but hope to buy their own place in the next few years.
Coffin says she and her husband want a space where they can create their own space and invest in a “legacy” for their two young sons. But the cost of groceries, gas and other essentials makes it difficult for a family of four to save money.
“How do you come up with $100,000 when you have a young family and debt? Even trying to figure out a plan … was difficult,” she said.
Coffin says they plan to reorganize their budget over the next year or two to focus on paying off student debt and building their savings before speaking to a real estate agent or mortgage broker to explore their options.
“We need strong financial planning and perhaps a windfall,” Coffin said.
As president of the Canadian Mortgage Brokers Association of Ontario, Michelle Campbell says a “consistent theme” she hears directly from brokers across the province is that the desire is there, but the overall cost of entering the market is overwhelming for first-time buyers when they factor in the down payment, closing costs and provincial property transfer tax.
Instead of trying to time the market, Campbell recommends first-time buyers focus on what they can control.
“What’s more important is understanding your budget, getting pre-approved and making sure you’re happy with the monthly payment, not just the purchase price,” said Campbell, a licensed mortgage broker with Mortgage Architects – A Better Way Mortgage Group in Mississauga, Ontario. “I also encourage buyers to think long-term. If they like the house in the next five to 10 years, short-term market fluctuations become significantly less important.”
Despite concerns about the cost of living and general economic uncertainty, many determined first-time buyers are pushing ahead.
In Toronto, Azzopardi and Monus continue to search for the house they want to live in for at least the next decade, but they’re in no rush to leave their rental until they find the right property.
“It’s a balancing act between trying to find something that’s affordable and something that we can grow into,” Azzopardi said.
But the appeal of owning your own home remains.
“It would be nice to get a home and find a place that’s ours,” Monus said. “It’s about building those roots and stability and having a space for ourselves.”
• Email: jswitzer@postmedia.com
Spring is traditionally the busiest time for real estate, and this year the stakes couldn’t be higher. Follow our Spring Real Estate Survival Guide series as we address some of the most pressing questions facing buyers and sellers, as well as expert advice on how to navigate the realities of a slower market.
Read more in our Spring Real Estate Survival Guide
- Why pinpointing the bottom of the Canadian real estate market might be harder than you think
- Buying in a Bear Market: These Dealing Tips Could Save Home Hunters Big Money This Spring (For Subscribers)
- The big correction: Not even Wayne Gretzky’s hometown escaped the “suburbs” crash
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