First-Time Buyers Need More Than Their Parents Help Says the CMHC
First-time buyers in the Canadian real estate market are faced with more pressing issues than just making a down payment or getting a home. But what comes next?
Many young people or first-time buyers are eager to hold the keys to their own homes but will things be so rosy after moving into the house?
A new report from the Canada Mortgage and Housing Corporation shows that first-time buyers who received help from their parents or family members have lower confidence levels in comparison to other buyers that made it on their own.
Despite the fact that they went through a less difficult time to buy a home, first-time buyers are still worried about what comes next.
About 71% of first-time buyers bought their homes without any help, while 18% needed the help of their parents.
The CMHC noted that buyers that sort the help of parents are still not at ease as the fear of the unforeseeable future financial challenges that might come their way.
Lauren Haw, CEO of online real estate brokerage Zoocasa stated that the 18% of first-time buyers with help from parents are unprepared for sizzling real estate markets such as Toronto and Vancouver.
Luckily for first-time buyers who find themselves in real estate markets such as Calgary and Edmonton where home prices are moderate, they can easily make down payments on their own without any help.
But 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 definitely need the help of parents or family members.
Close to 21% of Canadian millennials between the ages 18 to 35 needed financial assistance from their parents.
Strict mortgage regulations and other real estate measure taken by the provincial government made it very difficult for first-time buyers to enter the real estate market.
One of such mortgage regulation was the stress test buyers had to go through to determine if they would be able to repay their loan in an event of any financial changes such as an increase in interest rates. New changes to the down payments needed for homes costing more than half a million dollar also affected buyers trying to enter the market.
These new regulations affected buyers in different ways with some buyers making bigger payments, some moving to smaller homes or move to other reasonable markets while some decided to hold on to the dream of owning a home.
The CHMC also carried out a survey to determine the confidence level of first-time buyers and also know their concerns about unforeseen home ownership costs.
The data shows that 57% were quite worried about housing costs where as 51% showed concerns over spending in their homes. 58% also highlighted the possibility of going through home repairs of more than $5,000.