According to data from the 2018 Canadian Housing Survey, over 1.3 million people or 9% of Canadian households had bought their first home within the previous five years of the survey being conducted. Since 2018, we’ve seen one of the hottest housing markets on record and there’s lots of discussion surrounding homeownership.
Everyone is different but, despite our individualities, we can often follow similar patterns and paths. When it comes to homeownership in Canada, it’s safe to say that this is a goal for many. Let’s explore two different scenarios and couples I’ve worked with this past year and break down how we were able to help them make the switch from renting to owning!
Arya and Jake are both government employees — so Ottawa, am I right? — and have each been working full-time for well over ten years with very comfortable salaries. They’ve kept things modest by renting a nice one-bedroom apartment which, compared to what their earnings are, came at a relatively low rate and allowed them to live in the nicer area of town they wanted to. This situation also allowed them to save a lot of money which they planned on putting towards an eventual down payment. This combination of factors made it so that when they came to me, they had over $100K and more than enough for a healthy down payment of 20% or more which saved them from additional mortgage default insurance.
Now on the other side of 35, Arya and Jake felt comfortable and wanted to start looking at homes more seriously. You might think at first glance that post-35 is slightly older than the average for first-time homeownership but this is increasingly becoming the norm. There’s nothing wrong with renting as you build up your savings, helps provide some flexibility while you figure out your trajectory, and often allow people to invest money along the way. When we connected for a pre-qualification session, they felt comfortable with and were looking for something between $600K-$700K. They had very little debt, excellent credit, and their large down payment, so they were able to be pre-approved no problem and to a higher amount than they had anticipated.
Let’s put a pin in their story for a moment though and look at a different couple’s situation. Tessa and Ellie, who are much younger than Arya and Jake, still have great employment but a bit of a different overall situation. Tessa is also working in the government full-time but is at the beginning stages of her career. Meanwhile, Ellie is a fourth-year apprentice electrician doing very well for themselves but again, still early in their career. All of this to say that Tessa and Ellie weren’t coming to the table with a $100K down payment but they still had some money saved and a more modest budget that mirrored the $20K down payment they had.
Now, you may read these two scenarios and think that one was problem-free while the other was more limited but still doable. There is some truth to that statement but Arya and Jake still encountered many challenges. With the market being as fast-paced and active as it was the past year, there was lots of competition driving up prices, especially in highly sought-after markets, and that $600K-$700K range quickly started looking like it’d be closer to $1M. They realized throughout their house hunting that what they really wanted would cost more due to the desired location, quality of the home, and competitiveness of the market.
Tessa and Ellie were less picky in terms of location and were more focused on getting something for the best price possible. They didn’t mind looking outside the city and a longer commute was no problem. Their budget was in the $200K-$300K range which meant they would likely be looking in more rural areas to find their first-time dream home. They were also okay getting something that they could make improvements on with upgrades as opposed to a turnkey five-star home in the city. Even with a down payment one-fifth the size of Arya and Jake’s, Tessa and Ellie had flexibility on their side and weren’t as entrenched in the market pressures as their counterparts.
So what ended up being the result? Well, we have two completely different couples in this story, both qualified in their own right, and both found themselves having to make some concessions and compromises. For Arya and Jake, they had to accept and get comfortable spending more money than they had originally hoped to find the type of place they were looking for and in the location they desired. Tessa and Ellie were able to stay within their budget but were limited in terms of available locations and had to be flexible on that front.
In the end, both couples found a home and are now first-time owners. Arya and Jake are nestled right downtown in a modern semi-detached home in budding Overbrook while Tessa and Ellie have a bungalow in the highly desired cottage country of La Pêche, QC!
Contact the Kyle Miller Mortgage Agent team so we can discuss your situation and help find solutions. If you’re new to home buying, there are lots of decisions to be made so let us ease the burden by helping you understand your best options!
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