Down payments are the biggest fear for first-time buyers
Having a sufficient down payment to afford the home they want is the largest concern of first-time buyers according to a new survey.
The poll of recent homebuyers by mortgage insurer Genworth Canada and real estate brokerage Royal LePage found that 57% of respondents nationwide ranked that as their top fear before buying their first home.
Those in Toronto were most concerned about their down payment power (68%) while Vancouverites were less so (58%). But in Montreal, even with home prices around a third of those in Vancouver, 60% were concerned that their down payment was too small.
"While interest rates remain historically low, it is not surprising that first-time home buyers in Montreal are increasingly concerned about their down payment," said Phil Soper, president and chief executive officer, Royal LePage. "Montrealers have been watching home values escalate over the past three years. Many are wondering if they have time to grow their down payment or if they should get in the market now as prices continue to rise."
First-time buyers are willing to trade space for a shorter commute with 48% preferring this while 32% want a larger home even if they have to travel further to work.
"Even in cities where first-time home buyers have to push themselves to get on the property ladder, cost isn't the only consideration when buying a first home," said Soper. "While some young people are relocating to more affordable cities, those who stay value shorter commutes and access to the benefits of city life."
Paying low rents to the ‘rents
One in four new homeowners had been living with their parents before buying their first home.
A similar share had been paying rent to their parents but 30% said the amount was below market rates.
As they were still at home, 17% said their parents had delayed downsizing and a further 15% said that wouldn’t happen until younger siblings leave the nest.
Sixty per cent of respondents in Ontario expressed anxiety about their down payment stretching enough to get the home they wanted, compared to 68 per cent of respondents in Toronto.
"Buying a property can be stressful for anyone, but for first-time home buyers, the anxiety is magnified by the unknowns," said Caroline Baile, broker, Royal LePage Your Community Realty. "A good starting place is to define your wishlist and focus on your priorities."
Shorter commutes were valued more than square footage in Toronto as 59 per cent of respondents in the region preferred a more expensive and smaller home located closer to where they or their spouse work – the highest regional percentage in Canada.
"There is a large portion of first-time home buyers in Toronto who will sacrifice size for location. Time is important – as are childcare, schools, and proximity to work," said Baile. "Sometimes that means purchasing a condo in the city within walking distance of work, or even living with parents a little longer to position themselves better to get the home they want."
Thirty per cent of respondents in Ontario and 34 per cent in Toronto lived with parents or other relatives before buying their first home, surpassing the national average (25%).
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