(The Canadian Press)

(The Canadian Press)

1st-time homebuyers see new opportunities, challenges in pandemic economy

Canadians are willing to give a child, family member an average of $60,513 to help them buy a home

With mortgage rates at historic lows and price growth tapering in certain markets, the COVID-19 pandemic has presented both opportunities and challenges for first-time homebuyers.

New buyers are seeing condo prices come within reach in downtown areas awash with vacant high rises. But young families are also being priced out of starter homes in suburbs at a faster rate.

“From first-time homebuyers what I’m seeing is a lot of people reaching out, really since the summer, and trying to understand: Is it the right time for them to buy?” said Patrick McKinnon, a sales representative at One Group Toronto Real Estate.

“They’re seriously considering doing so now while they still have the opportunity … it is the best time it’s been to buy all year.”

For the group of buyers drawn to entry-level condos, McKinnon says, the conditions are ripe. Buyers, often in their 20s, have an opportunity to live downtown or potentially have a rental property down the line.

But for buyers who spent their 20s and early 30s renting in cities and are ready to settle down, there aren’t too many deals to be had. Suburban markets that were once affordable are now out of reach as existing homeowners, armed with big gains on equity in their properties, bid up suburban homes.

In the Greater Toronto Area in November, prices were up nearly 20 per cent year-over-year in Durham region, more than 22.5 per cent in Oshawa, Ont. and nearly 14 per cent in Brampton, Ont. Considering the average home price in the Toronto area has more than doubled, growing from $395,234 to $819,288 between 2009 and 2019, equity can be an advantage.

Brampton real estate agent Bethany King said that of all the homebuyers she sees, first-time purchasers are in the toughest spot.

“With so much pent-up demand, our entry-level pricing has officially shifted, and it’s becoming more and more expensive for them,” said King, a team leader at Century 21 Millennium Inc. brokerage.

The Quebec Professional Association of Real Estate Brokers has highlighted a similar trend, noting that adults aged 18 to 34 are now less tethered to a physical workspace, as COVID-19 has widened acceptance of work from home. But as the suburbs become more career-friendly, this same group is more likely to have had their finances negatively impacted during the pandemic, the real estate association said.

“(Experienced) buyers are in a better financial position to take advantage of real estate market opportunities and move up in product and price,” said Charles Brant, director of market analysis at the QPAREB, in a statement this month.

While Canadians generally saved more money during the pandemic, Statistics Canada noted that millennial-led households faced greater economic risk this year. These younger workers, Statistics Canada said, have higher costs of entry to housing and less equity in financial and real estate assets — and are also more likely to work in industries more deeply impacted by the pandemic.

“Now, the overall affordability is better with these lower interest rates, and so that’s why we’re seeing people purchase (homes),” said Paul Beaudry, Deputy Governor of the Bank of Canada, in a recent question-and-answer session.

“The difficulty is really down payments for young people. … If you can get in, it’s not that costly to carry the cost of a house in terms of the interest rate cost. What’s hard is actually getting in.”

Ottawa has taken note. The government’s fall economic statement said it would expand eligibility for the first-time homebuyer incentive by raising the maximum house price for the incentive from about $505,000 to about $722,000 next year.

An online poll released by RBC this month indicated that Canadians were willing to give a child or family member an average of $60,513 to help them buy a home, as about 58 per cent of respondents said it was almost impossible to buy a home on their own. Nonetheless, about 81 per cent of respondents said homeownership was a good investment.

According to the polling industry’s generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.

That draw to buying a home as an investment comes even as the average rent for Canadian properties listed on Rentals.ca fell more than nine per cent between November 2019 and November 2020.

Prospective buyers who may be under the impression that real estate prices only go up should consider the plight of those who bought condos in Toronto before prices fell this year, cautioned Hilliard MacBeth, an investment adviser and author of “When the Bubble Bursts: Surviving the Canadian Real Estate Crash.”

While prices may be coming down for city condos, MacBeth said maintenance fees, insurance and taxes can still make them far from affordable compared to rentals. Plus, he says, young buyers could find they don’t have the equity to move up in a few years, if prices fall more.

“A whole bunch of first-time buyers from five years ago, and three years ago and two years ago, that bought these condos in the centre of Toronto — now they’re stuck,” says MacBeth.

Anita Balakrishnan, The Canadian Press

Real estate

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Tom Lennox finds peace when he runs in the Cumberland Forest. He hasn’t missed a day in nearly a year. Photo supplied
Cumberland runner nears 366 consecutive days on the trails

Cumberland resident Tom Lennox has been running a minimum of five kilometres… Continue reading

Courtenay’s Ace Brewing Company’s Jet Fuel IPA was chosen for second place in the annual Canadian Brewing Awards. Photo submitted
Courtenay brewery takes silver medal at Canadian Brewing Awards

“It’s huge - they are the biggest awards in Canada that you can get (in the brewing industry).”

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the legislature, Jan. 11, 2021. (B.C. government)
Vancouver Island smashes COVID-19 high: 47 new cases in a day

Blowing past previous records, Vancouver Island is not matching B.C.s downward trend

The Comox Strathcona Regional Hospital District board is concerned about having to fund more than just hospitals like the one in the Comox Valley. Photo by Mike Chouinard
Comox Strathcona board worried over funding more than hospitals

Island Health points to seniors care to reduce demand at acute care sites

Environment Canada is forecasting snow for the east Vancouver Island region the weekend of Jan. 23. (Black Press file)
Up to 15 cm of snow forecast for Courtenay area this weekend

Snow to begin Saturday night, according to Environment Canada

Toronto Public Health nurse Lalaine Agarin sets up for mass vaccination clinic in Toronto, Jan. 17, 2021. B.C. is set to to begin its large-scale immunization program for the general public starting in April. THE CANADIAN PRESS/Frank Gunn
B.C.’s COVID-19 mass vaccinations expected to start in April

Clinics to immunize four million people by September

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

School District 57 headquarters in Prince George. (Mark Nielsen, Local Journalism Initiative Reporter)
Prince George school district settles with sexual abuse victim

Terms were part of an out-of-court settlement reached with Michael Bruneau, nearly four years after he filed a lawsuit

Surrey provincial court. (File photo: Tom Zytaruk)
New COVID-19 protocols set for provincial courthouses

The new rules were issued on Jan. 21, and took effect immediately

Dog owners, from left, Marlyn Briggs with Nayla, Marjory Sutherland with Effie and Mick, and Christina Godbolt with Conon walk their pets frequently at the Chemainus Ball Park but are growing increasingly concerned about drugs being found discarded in the area. (Photo by Don Bodger)
Puppy rushed to emergency 3 times after ingesting drugs in Chemainus public spaces

Dog owners walking in Chemainus parks urged to take caution

Police in Vancouver looking for male suspect who allegedly spat and attacked a store manager for not wearing a mask, at 7-Eleven near Alma Street and West 10th Avenue just before noon on Dec. 17, 2020. (Vancouver police handout)
VIDEO: Man spits on 7-Eleven manager over mask rule, sparking Vancouver police probe

‘Unfortunately, the store manager sustained a cut to his head during the assault’

The Vancouver-based SAR team successfully rescued two lost snowshoers off of the west side of Tim Jones Peak in the early morning of Monday, Jan. 19. (North Shore Rescue photo)
B.C.’s busiest SAR team raises alarm after 2021 begins with fatality, multiple rescues

‘People beyond ski resort areas of Seymour, Grouse, and Cypress go without cell reception,’ SAR warns

Police are searching for an alleged sex offender, Nicole Edwards, who they say has not returned to her Vancouver halfway house. (Police handout)
Police hunt for woman charged in ‘horrific’ assault who failed to return to Surrey halfway house

Call 911 immediately if you see alleged sex offender Nicole Edwards, police say

A screenshot from a local Instagram account video. The account appeared to be frequented by Mission students, and showed violent videos of students assaulting and bullying other students.
Parents, former students describe ‘culture of bullying’ in Mission school district

Nearly two dozen voices come forward speaking of abuse haunting the hallways in Mission, B.C.

Most Read