Hope for the First Time Buyer

“How are young people who do not currently own a home going to be able to afford to get into this market?”  This is a question that I hear on a regular basis.

Things may appear hopeless, but that doesn’t mean that they are.  

The answer to the above question is simple.  VERY CAREFULLY and VERY STRATEGICALLY.  

But, just because the answer to the question is simple doesn’t mean that the journey is.  Those who are succeeding are doing so by understanding that the current market situation is not anything we have experienced in the past, and they know that this market is too tricky to navigate on their own.


Here are a few important tips:

  • Hire a professional – and the right one!  
  • Listen only to advice that is well-informed 
  • Focus on your situation, instead of comparing your situation to someone else’s
  • Do not delay – a better market to buy may not be around the corner


This advice may sound harsh, but it is coming from a place of care, and it is just the reality of our current market.  Here is some follow-up advice on the above tips.


On hiring the right professional

There is just too much at stake to try and navigate through this market on your own.  Enlisting a professional to help you make your way through the process is a must.  Don’t settle for any random person with a real estate license and some free time, though.  There are a variety of levels in skill and experience.  Seek out someone with a proven track record and at least a few years of success under their belt.  Interview a few agents.  Start by asking your friends or family who have recently purchased who they used.  If they would recommend their agent, include them in the ones you interview.  It has to be a good fit.  Make sure they’re full-time in the business is key.  Properties move too quickly to deal with a part timer.  Find out what kind of availability they will have to help you in your search.  Ask them how they will represent you when it’s offer time, and what kind of advice they would give you and strategies they would use to help your offer stand out, in addition to just the offer price.


On listening to the right advice

Most successful agents are the ones who give very direct advice.  Not every buyer likes it, but the ones who take it to heart are much farther ahead because of it.  Agents who make sure their clients are fully aware of the current market (and take the time to have the tough conversations upfront) are more successful in helping First Time Buyers get into the market.  So many are finding this market hopeless.  I tell people you had better be ready to fasten your seatbelt and compete, and my team and I will help you to win.  Most successful buyers do not listen to too much negative talk that they’re hearing on the sidelines, mainly from the media or even from well-meaning people (some of them loved ones) who haven’t bought a property in many years.  


Parents may be giving advice based on when they purchased 20 or 30 years ago.  What they did during that market is no longer commonplace in today’s market.  Your parents may not think it is a good idea to take on condo fees, but there weren’t as many condo options when they first purchased, and a condo may be the only thing you qualify for.  Besides, today’s buyer may not have the same amount of time in their schedule to maintain a detached home, or the same knowledge or skillset to do odd jobs around the house that their parents had.  That’s fine, so we just look for the best home out there for your money, and it may be a condo.  You’ve got to start somewhere!


The news reports are often Canada-wide and aren’t even relevant to our local market.  I have found that our local market is hotter and more stable than many other markets in Canada, and that’s because of a number of factors that make our market unique.


On keeping your focus

Everyone needs to realize that their first house may not look anything like the first house that their parents bought.  Mom and Dad may have bought a little detached house for their first home, but that same detached house today, depending on its location, may now be worth close to a million dollars.  That is not in the budget for most first time buyers.


The best thing to do when you are a first time buyer is to not compare your situation to anyone else’s, and that includes your parents when they were at in your stage in life, or even your older siblings or cousins or close friends or colleagues who may have gotten into the market a few years before you.  The market has changed very rapidly in the last few years, particularly the last year, which means that it has had a huge impact on the type of home that most first time buyers qualify for.


So, face it head on that, unless your first home is going to be a major fixer upper or an hour or two outside of Waterloo region, your first home may not be a detached home.  In fact, it also may not be a freehold property to start.  But, on average, Canadians move every 5 years, so your first home doesn’t need to be your forever home.  It’s just your foot in the door, so it doesn’t have to be your dream home, but your best home for your budget.


On timing

Your parents may also think it is wise for you to save up at least 20% for your down payment so you don’t have to pay the CMHC fees.  This was great advice many years ago, when getting into the market was much easier, but when the increase in property values outpaces the rate in which a buyer is able to save, this advice really isn’t practical anymore.  The delay in getting into the market will cost you way more than the one time cost of CMHC fees.


I know lots of agents who were telling their clients back in 2016-2017 to just wait until the market corrects and prices drop down again.  Well, that never happened.  I bet a lot of those buyers never purchased anything, and I know for a fact that a lot of those agents are no longer in the business.


Do you have a permanent source of income?  At least a 5% down payment?  Have you been pre-approved for a mortgage?  Then, it’s time to get serious.  Because if the property values continue to increase, just a month or two delay can make the difference between you being able to get into the market or not, or it can make the difference of what type of home you are able to purchase.  So, do not delay.  The time to buy is now!


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