Toronto real estate agent, Nina Timoshyna, tells a common story for the first time home buyer that she often listens to: “A few years back we wanted to buy a house in North York, but we didn’t have enough money for down payment. We needed to accumulate more. While we were working on it, the Toronto house prices jumped up. We were not able to catch up with the growing house costs. So we decided to save a little bit more and to buy our first home in Maple. Then in Newmarket. Today we can only afford to buy a house in Bradford.”
Buying a home is one of the most important financial decisions one can make. The main concern for those who want to buy their first home is building a substantial down payment. Rising prices in the GTA real estate urban markets are causing many first-time buyers to adjust their buying plans.
According to a Bank of Montreal report on first-time home buyers in March, 2014, the average budget is $408,300 in Toronto. Indeed, being able to afford a house in today’s Toronto marketplace is a luxury.
Because real estate prices have been consistently rising, those who put off their home buying need to ensure that the rate at which they are saving outpaces price gains. Otherwise, at the end of the day they may find themselves further behind.
According to the Canadian Real Estate Association, the average price of a Canadian home has risen to another 10% to over $400,000 in February 2014. While prices were up significantly, the actual number of homes sold is only 0.3% up. Home sales are expected to trend higher heading into the spring, and be further supported over the second half of 2014 by a widely anticipated pick-up in Canadian economic growth. Demand for detached houses remains strong, but the condo market is likely to slow.
A Bank of Montreal report on first-time home buyers says the average budget has increased to $316,100. That is up nearly 6% from an average of $300,000 in last year’s report on first-time home buyers. About 30% of first time home buyers expect parents or family to assist in their purchase, and 61% have made cutbacks to their lifestyle in order to save for their first home. 60% say their home-buying timeline has been delayed due to rising real estate prices.
By Nina Timoshyna, Right at Home Realty Inc., Brokerage