To all the first-time buyers out there, do not lose hope Image

To all the first-time buyers out there, do not lose hope

By Sam Reiss on Sep 11, 2019

To be honest, I haven’t been paying too much attention to the state of the housing market over the last week. My son, David Reiss, passed away unexpectedly at the beginning of the month, so I was disconnected and hosting Shiva visits. My weekly posts are somewhat therapeutic for me though as a venting mechanism, so today I want to discuss the future. 

I want people to be hopeful about the future, and for many, that involves feeling confident in their home ownership goals. A home is a foundation for your family. It’s a place to grow and to love. So, I’m happy to see that first-time buyers are feeling optimistic about Canada’s housing market and the federal government’s First-Time Home Buyer’s Incentive.    

Am I convinced the FTHBI is the solution first-time buyers in the Greater Toronto Area need? Not quite. A Zoocasa study found that the FTHBI wouldn’t work on an average home in the GTA, Hamilton-Burlington, or Kitchener-Waterloo. However, the FTHBI would be helpful in Niagara Region, Ottawa, Windsor-Essex, London and St.Thomas, Sudbury, and Thunderbay.   

I think it’s important to remember that Zoocasa’s study is based on average prices. In my experience, first-time buyers aren’t buying average homes. If the average home price in the GTA is above $800,000, that means there are prices way higher and lower. 

Through the FTHBI, the max priced home you can buy is around the $500,000 mark. Daniels is launching a new condo in Vaughan this fall called The Thornhill and prices are expected to start in the high $300,000s. So there are easily a handful of units in this one development where first-time buyers can take advantage of the FTHBI. 

Another one is Notting Hill in Toronto by Lanterra Developments. Prices will start from the high $300,000s here, too. The remaining units at The Stockyard District Residences in Toronto by Marlin Spring have units from the $400,000s. My point is that there are opportunities in the GTA to take advantage of the FTHBI. 

One thing I’m definitely on board for is a 30-year amortization for insured mortgages. Mortgage Professionals Canada recently released the results of a survey, reporting that first-time buyers believe a 30-year amortization would do more to help them afford a home than the FTHBI. 

MPC recommends the federal government to allow first-timers to choose between the two. I think this makes sense. For the most part, I don’t think first-time buyers are staying in their homes and paying them off in 25 years. They’ll likely move-up before being mortgage free, so why not let them add five years to decrease their monthly costs? 

With a 30-year amortization, it takes longer to pay off the principal, but you’re saving money to put towards other things like paying off credit cards or any other debt. Once you take care of your debt, then you can start putting more towards your mortgage payments. 

The FTHBI may not be a cure-all, but it is going to help thousands of first-time buyers across Canada. Moving forward, I think 30-year insured mortgages and perhaps a more flexible stress test that accounts for income increases would round out the market for most first-time buyers. 

In uncertain times, I am hopeful. 

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