Why More First Time Homeowners Are Opting for Condos

A lot of first time home buyers in Bradford and other big cities in Canada today are leaning towards condo units over townhouses and detached units. Less square footage, in general, means more affordable homes. With the rising prices of homes in major Canadian markets, first time homeowners find it challenging to buy a house.

In Canada’s most expensive city, Vancouver, 47% of the first-time homeowners settled for a condo. The figures were lower in Montreal at 39%, and Toronto at 35%, but still considerable. According to Genworth, this is an indication of the financial preparedness of Canadians.

The study was analyzed by the Environics Research Group. 1,803 Canadians in the 25 – 40 year old bracket, and who bought a house in the last 24 months, were interviewed during the first two months of 2017.

Genworth and Environics discovered that from 2015 to 2017, the number of first-time Canadian homebuyers dropped to 5.8% from 7.3%. This represents a 21% decrease over the two-year period.

VP David MacDonald of the Environics Research Group reports that the drop in first-time buyers resulted from the current financial strain in Canada. Simply put, 1/5 of these homebuyers in 2015 would no longer be in the market after two years. This is because of the prohibitive prices in some specific markets, and the new regulatory or financial sustainability requirements imposed on first-time buyers.

With the rising prices of homes in major Canadian markets, around 64% of new buyers find it challenging to buy a house in Toronto, 63% in Vancouver, and 62% in Calgary.

First timer home buyers in Toronto shelled out more money for their homes. Median price was pegged at $500,000, compared to $410,000 in Toronto and $385,000 in Calgary. Because of the pressure they feel from the increasing home prices, people are carefully weighing their options before they invest.

In Toronto, one of the main motivators for buying a house is to get into the market before the prices increase further. Balance is provided by people who worry that it may not yet be the right time to purchase or it might not be a sound financial decision.

54% of first-time home buyers make around $50,000 to $99,000, with 61% of them able to come up with a down payment of no more than 20% from 2015 to 2017. To allow them to buy now, a lot of first-time buyers seek help from their mortgage broker and family.

As home prices have risen in the Toronto and Vancouver markets faster than anywhere else in the country, many those who were able to afford the required down payments got help from parents and relatives who chipped in. In contrast, a big chunk of Atlantic and Calgary first-timers were able to buy a detached home.

48% of first-time homebuyers in Calgary and 66% in the Atlantic purchased a detached home. While Canadians, in general, struggle with housing prices and the uncertain market conditions, many first-time homeowners are making sound decisions. Thus, the property market in Canada is still in good shape.