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Home Buying Trends for First-Time Buyers

September 19, 2019

Making the leap into homeownership for the first time is an exciting, emotional and rewarding journey. It’s no small decision and often the most significant financial commitment people make in their lives. But for the majority of first-time buyers in Canada, the reasons are clear: buyers want to own their home, they’re financially ready and they believe that homeownership is a good long-term financial investment.

Of course, finding the right home and making that purchase decision is not without its challenges. More than a third of first-time buyers experience concern or uncertainty about buying a home, according to a CMHC survey.

From house hunting and fluctuating markets to home inspections and renovations, there are many details to consider and a lot of information to process. The key for first-time homebuyers is research, learning as much as possible will prepare you for confident decision-making. Here are some of the current trends affecting first-time homebuyers in Canada.

1. Launch of the new Home Buyer Incentive

For many potential first-time buyers, the biggest news in homeownership is the recently launched First-Time Home Buyer Incentive. This Government of Canada program is designed to help qualified first-time buyers reduce their monthly mortgage carrying costs through a 5%—10% shared equity mortgage.

Buyers still need a minimum of a 5% down payment, but the government will step in to help top up that amount, which is repayable once the home sells or within 25 years. The program targets young Canadians, looking at starter homes under $500,000.

There are limits and qualification requirements to be aware of, for more information visit the government Home Buyer Credit website.

2. Lower qualifying mortgage rate from the Bank of Canada

In July, the Bank of Canada lowered the qualifying mortgage rate for the first time in three years—from 5.34% to 5.19%. This five-year fixed mortgage rate is the rate used in mortgage stress tests, which determine if applicants qualify for a mortgage. This can be seen as positive for first-time buyers as the lower rate makes it easier to pass the stress test and qualify.

Find a mortgage broker that knows the ins and outs of first-time home ownership. They can often become your greatest resource!

3. Canadian homes sales are up and the market is improving

After a cooling and correction phase over the last few years, as of July the home sales market in Canada entered recovery mode and showed signs of growth.

Across Canada, home sales were up 12.6% in July from a year ago. In Canada’s largest markets, Vancouver and Toronto, homes sales climbed by nearly 25%. Many other markets across the country that were in slumps, according to the Canadian Real Estate Association, are now recovering. As more homes are being sold, for first-time homebuyers, this means that there’s a tighter supply and relatively strong price growth. The national average price of a home sold in July was just under $499,000, up 3.9% from the same month last year.

4. First-time homebuyers are looking to the suburbs

In search of ideal and affordable homes, many young first-time buyers are turning away from major city centres. Most of millennials have goals of homeownership, but only a few years ago the majority were looking to purchase mostly in urban areas. This trend has shifted according to Spring Homebuying Survey and now 64% of these young homebuyers say they would give up city living for affordable homes that meet their needs.

5. More first-time buyers are looking at nontraditional approaches to get in the market

Determined to break into the market, many house-hunters are going to increasingly innovative and creative lengths to solidify their first home purchase.

Perhaps that’s why we’re seeing a growing number of first-time buyers turning to family for support either putting together a down payment or co-signing a mortgage. According to information collected in Ontario, this now accounts for 1 in 7 of first-time homebuyers. Some buyers are taking it one step further by  making alternative ownership and living arrangements to make their dreams of homeownership a reality – like co-buying and property management.

It can seem like information overload when purchasing a home for the first time. When you’re making one of the biggest purchases of your life, you want a professional to support you every step of the way. This is where a mortgage broker can benefit your home buying experience. Find a Mortgage Broker today!