(The Canadian Press)

(The Canadian Press)

1st-time homebuyers see new opportunities, challenges in pandemic economy

Canadians are willing to give a child, family member an average of $60,513 to help them buy a home

With mortgage rates at historic lows and price growth tapering in certain markets, the COVID-19 pandemic has presented both opportunities and challenges for first-time homebuyers.

New buyers are seeing condo prices come within reach in downtown areas awash with vacant high rises. But young families are also being priced out of starter homes in suburbs at a faster rate.

“From first-time homebuyers what I’m seeing is a lot of people reaching out, really since the summer, and trying to understand: Is it the right time for them to buy?” said Patrick McKinnon, a sales representative at One Group Toronto Real Estate.

“They’re seriously considering doing so now while they still have the opportunity … it is the best time it’s been to buy all year.”

For the group of buyers drawn to entry-level condos, McKinnon says, the conditions are ripe. Buyers, often in their 20s, have an opportunity to live downtown or potentially have a rental property down the line.

But for buyers who spent their 20s and early 30s renting in cities and are ready to settle down, there aren’t too many deals to be had. Suburban markets that were once affordable are now out of reach as existing homeowners, armed with big gains on equity in their properties, bid up suburban homes.

In the Greater Toronto Area in November, prices were up nearly 20 per cent year-over-year in Durham region, more than 22.5 per cent in Oshawa, Ont. and nearly 14 per cent in Brampton, Ont. Considering the average home price in the Toronto area has more than doubled, growing from $395,234 to $819,288 between 2009 and 2019, equity can be an advantage.

Brampton real estate agent Bethany King said that of all the homebuyers she sees, first-time purchasers are in the toughest spot.

“With so much pent-up demand, our entry-level pricing has officially shifted, and it’s becoming more and more expensive for them,” said King, a team leader at Century 21 Millennium Inc. brokerage.

The Quebec Professional Association of Real Estate Brokers has highlighted a similar trend, noting that adults aged 18 to 34 are now less tethered to a physical workspace, as COVID-19 has widened acceptance of work from home. But as the suburbs become more career-friendly, this same group is more likely to have had their finances negatively impacted during the pandemic, the real estate association said.

“(Experienced) buyers are in a better financial position to take advantage of real estate market opportunities and move up in product and price,” said Charles Brant, director of market analysis at the QPAREB, in a statement this month.

While Canadians generally saved more money during the pandemic, Statistics Canada noted that millennial-led households faced greater economic risk this year. These younger workers, Statistics Canada said, have higher costs of entry to housing and less equity in financial and real estate assets — and are also more likely to work in industries more deeply impacted by the pandemic.

“Now, the overall affordability is better with these lower interest rates, and so that’s why we’re seeing people purchase (homes),” said Paul Beaudry, Deputy Governor of the Bank of Canada, in a recent question-and-answer session.

“The difficulty is really down payments for young people. … If you can get in, it’s not that costly to carry the cost of a house in terms of the interest rate cost. What’s hard is actually getting in.”

Ottawa has taken note. The government’s fall economic statement said it would expand eligibility for the first-time homebuyer incentive by raising the maximum house price for the incentive from about $505,000 to about $722,000 next year.

An online poll released by RBC this month indicated that Canadians were willing to give a child or family member an average of $60,513 to help them buy a home, as about 58 per cent of respondents said it was almost impossible to buy a home on their own. Nonetheless, about 81 per cent of respondents said homeownership was a good investment.

According to the polling industry’s generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.

That draw to buying a home as an investment comes even as the average rent for Canadian properties listed on Rentals.ca fell more than nine per cent between November 2019 and November 2020.

Prospective buyers who may be under the impression that real estate prices only go up should consider the plight of those who bought condos in Toronto before prices fell this year, cautioned Hilliard MacBeth, an investment adviser and author of “When the Bubble Bursts: Surviving the Canadian Real Estate Crash.”

While prices may be coming down for city condos, MacBeth said maintenance fees, insurance and taxes can still make them far from affordable compared to rentals. Plus, he says, young buyers could find they don’t have the equity to move up in a few years, if prices fall more.

“A whole bunch of first-time buyers from five years ago, and three years ago and two years ago, that bought these condos in the centre of Toronto — now they’re stuck,” says MacBeth.

Anita Balakrishnan, The Canadian Press

Real estate

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Edna Whiteley in 2016. “Her whole life has been happy and about helping others,” says her nephew Bob Steed. Photo: Submitted
Nelson’s ‘little firecracker’ Edna Whiteley turns 100

Whiteley is known as a welcoming ambassador for new arrivals in the city

Photo: Trail Times
Trail property taxes will go up 3.99 per cent in 2021

Trail council kept the 2020 property tax rate at 0 % over the previous year

B.C. Finance Minister Selina Robinson outlines the province’s three-year budget in Victoria, April 20, 2021. (B.C. government video)
B.C. deficit to grow by $19 billion for COVID-19 recovery spending

Pandemic-year deficit $5 billion lower than forecast

A syringe is loaded with COVID-19 vaccine at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS/Jonathan Hayward
67 new cases of COVID-19 in Interior Health

Thirty people in the region are hospitalized with the virus, 11 of whom are intensive care

An animal carrier full of bullet holes and containing a dead animal was found near Castlegar. Photo: Colleen Schwartz
Castlegar woman finds dead animal inside carrier riddled with bullet holes

The remains were discovered near Syringa Creek Provincial Park

A lone traveler enters the Calgary Airport in Calgary, Alta., Monday, Feb. 22, 2021. THE CANADIAN PRESS/Jeff McIntosh
VIDEO: Trudeau defends Canada’s travel restrictions as effective but open to doing more

Trudeau said quarantine hotels for international air travellers will continue until at least May 21

In this image from video, former Minneapolis police Officer Derek Chauvin, center, is taken into custody as his attorney, Eric Nelson, left, looks on, after the verdicts were read at Chauvin’s trial for the 2020 death of George Floyd, Tuesday, April 20, 2021, at the Hennepin County Courthouse in Minneapolis, Minn. THE CANADIAN PRESS/Court TV via AP, Pool
George Floyd’s death was ‘wake-up call’ about systemic racism: Trudeau

Derek Chauvin was found guilty Tuesday on all three charges against him

Former University of Victoria rowing coach Barney Williams is photographed in the stands during the Greater Victoria Invitational at CARSA Performance Gym at the University of Victoria in Victoria, B.C., on Friday, November 29, 2019. THE CANADIAN PRESS/Chad Hipolito
Rowing Canada sanctions former head coach of B.C. varsity women’s team

Suspension of Barney Williams would be reversed if he complies with certain terms

A man pauses at a coffin after carrying it during a memorial march to remember victims of overdose deaths in Vancouver. THE CANADIAN PRESS/Darryl Dyck
B.C. announces historic half-billion-dollar funding for overdose crisis, mental health

Of it, $152 million will be used to address the opioid crisis and see the creation of 195 new substance use treatment beds

Children’s backpacks and shoes are seen at a CEFA (Core Education and Fine Arts) Early Learning daycare franchise, in Langley, B.C., on Tuesday May 29, 2018. THE CANADIAN PRESS/Darryl Dyck
B.C. budget to expand $10-a-day child care, but misses the mark on ‘truly universal’ system

$111 million will be used to fund 3,750 new $10-a-day spaces though 75 additional ChildCareBC universal prototype sites over the next three years.

The IIO is investigating after a police dog bit a man during a traffic stop near Ladysmith on April 17, 2021. (Black Press Media stock photo)
Man arrested in incident at Canada-U.S. border near Roosville

A man who crossed the border illegally was apprehended by U.S. officials

Mak Parhar speaks at an anti-mask rally outside the Vancouver Art Gallery on Sunday, Nov. 1, 2020. Parhar was arrested on Nov. 2 and charged with allegedly violating the Quarantine Act after returning from a Flat Earth conference held in Geenville, South Carolina on Oct. 24. (Flat Earth Focker/YouTube.com screenshot)
Judge tosses lawsuit of B.C. COVID-denier who broke quarantine after Flat Earth conference

Mak Parhar accused gov, police of trespass, malfeasance, extortion, terrorism, kidnapping and fraud

Most Read