We recently had the pleasure of chatting with four well known real estate industry experts. We discussed the various market cooling strategies being proposed and we also asked them if they had any first-time buyer advice, since this segment is probably finding it the most difficult to purchase in the Greater Toronto Area (GTA) at the moment.
The pros we chatted with include Barbara Lawlor, President and CEO, Baker Real Estate Incorporated; Jason Mercer, Director Market Analysis for the Toronto Real Estate Board (TREB); Bob Finnigan, President, Canadian Home Builders Association (CHBA) and COO, Acquisitions & Housing, Herity; Ben Myers, Senior VP, Market Research & Analytics, Fortress Real Developments.
To make things for convenient for our first-time buyer readers, we’ve compiled their advice into one post. Here’s what they had to say:
1) Explore different avenues for financial support
Family members, specifically the bank of mom and dad, are usually the first people you turn to when you need money. If they are willing and able to help, that’s great! Just remember that you need to pay them back (with interest so it’s worth it to them too). Also, qualified persons can borrow up to $25,000 in a calendar year from their RRSP to go towards a first home.
2) Purchase as much as you can and settle in
You should mentally prepare to step up and be ready to take on a mortgage, property taxes, and potentially condo/maintenance fees. Discipline is key. Once you’re prepared to make the leap, get as much space as you can in the location of your choosing because you have to be in it for the long run. Wherever you buy, plan to live there for at least five years.
3) Work with a real estate agent
It doesn’t cost you a thing, so why not? A good real estate agent can take your criteria and narrow down your search to save you time, plus they have access to the MLS. Your real estate agent can also answer any questions you have about the buying process and refer you to other industry professionals like lawyers, lenders, or contractors.
4) Decide what’s important and be prepared to compromise
If you want a lot of space, don’t expect to find something in your budget in the Entertainment District. If you don’t mind a longer commute, you can find a lot more space for your money on the outskirts of downtown, though price growth is out of control across the region. If you’re willing to live outside the GTA, there are more spacious options in places like Innisfil, Barrie, Guelph, Hamilton, and St. Catharines.
5) Temper expectations
The home you grew up in was probably not the first home your parents bought. Over the years, they moved up and grew their family. In the 1980s and ‘90s, a townhome or semi was a realistic starter home; depending on the location, detached homes were options too. Today, a condo is a starter home if you’re looking to live in the GTA.
6) Buy new from a builder
In the resale market, listing prices have almost become arbitrary. Bidding wars have become so competitive that homes are selling for hundreds of thousands of dollars above asking; even in the condo market (though the Fair Housing Plan measures may have already started cooling the market). First-time buyers can’t compete. If you buy directly from a builder there are no bidding wars and you know there’s no extra work to be done on the home once it’s complete. Plus, you get to select your own features and finishes, which is something you wouldn’t have the budget for when buying resale.
7) Ask for deals
Ask and you shall receive (sometimes). Many builders offer incentives specifically to first-time buyers, whether it’s money back at closing or down payment support. Daniels is a great example. Their First Home Boost program turns your 5% down payment into 15% through an interest-free loan. They also have a Gradual Deposit Payment Plan that allows you to pay your down payment monthly.
With these tips, we hope all the first-time buyers out there feel more comfortable and confident venturing out into this hot market!