First-time buyers in the Canadian real estate market are faced with more pressing problems than making down payments or getting a home. Several young people or first-time buyers are keen to hold the keys to their own homes. Will things be so rosy after moving into the house?
A new report from the Canada Mortgage and Housing Corporation demonstrates that first-time buyers who got assistance from their parents or family members have lesser confidence levels in comparison to other buyers that made it on their own. Regardless of the fact that they went through a less difficult time to buy a home, first-time buyers are still worried about what comes next. Approximately 71% of first-time buyers bought their homes without any help, while 18% needed the help of their parents.
The CMHC pointed out that buyers who looked for the help of parents are still not at ease, as the fear of unpredictable future financial challenges that might come their way.
Lauren Haw, CEO of online real estate brokerage Zoocasa, specified that the 18% of first-time buyers with help from parents are unprepared for searing real estate markets such as Toronto and Vancouver.
Fortunately for first-time buyers who find themselves in real estate markets such as Calgary and Edmonton where home prices are modest, they can easily make down payments on their own without any help. Though in the case of Toronto and Vancouver where the average home price is three or four times more than the average household income, first-time buyers absolutely need the help of parents or family members. Close to 21% of Canadian utopians between the ages 18 to 35 required financial assistance from their parents.
Stringent mortgage rules and other real estate measures taken by the provincial government made it very difficult for first-time buyers to enter the real estate market.
One of such mortgage by-laws was the stress-test buyers had to go through to define if they would be able to repay their loan in the event of any financial changes such as increase in interest rates. New changes to the down payments needed for homes costing more than half a million dollars also affected buyers trying to enter the market.
These new guidelines affected buyers in different ways with some making greater payments, some moving to smaller homes, while others decided to hold on to the dream of owning a home.
CHMC also carried out an investigation to determine the confidence level of first-time buyers and also know their concerns about unanticipated home ownership costs. The data shows that 57% were quite worried about housing costs, where as 51% displayed concerns over spending in their homes. Another 58% also underlined the prospect of going through home repairs of more than $5,000.