How much are first-time homebuyers spending across Canada?
First-time home buyers are spending more to get into homeownership while some are putting off the buying decision based on financial considerations, says a new report from BMO.
The average spent in Canada by first-time buyers is $316,100, up from $300,000 in 2013, according to the BMO 2014 First-Time Home Buyers Report, with only one of the country’s top four markets coming in under the national average.
In Montreal, first-timers spend an average of $237,900, in Toronto $408,300, in Calgary $363,400, with Vancouver having the highest average first-timer spend of $506,500.
Despite the increases in spend, the average downpayment remains unchanged from last year at $50,576 (16% of the average national spend).
BMO also reports 30% of first timers expect parents or family to assist in their purchase, a percentage that rises to 40% in Montreal and Vancouver.
The majority (61%) have made cutbacks to their lifestyle in order to save for their first home.
Six in 10 say their home-buying timeline has been delayed, with 39% citing rising real estate prices as the main reason.
“Among the many considerations for those trying to get a foot in the door of the real estate market for the first time, the most important of all is building a substantial downpayment,” says Laura Parsons, a mortgage expert with BMO Bank of Montreal. “Buying a home is one of the most important financial decisions one can make, and typically represents the largest form of savings for Canadian households. It’s crucial those planning to buy are well-prepared and have considered all options available to them.”
The rising prices in the major markets are forcing first-timers to reconsider their first choice of housing.
“High prices in a few major cities, and the fact that prices are outrunning incomes in Toronto, are turning off some first-time buyers, while forcing others to go deeper into debt, tap their parents for hefty down payments and opt for a condo rather than a detached house,” says Sal Guatieri, senior economist, BMO Capital Markets.
While 60% of first-time buyers say they will set a budget and stick with it, 30% are prepared to go higher for the right home.
Parsons recommends first timers should set price boundaries before setting out on the home-buying journey.
“To help ensure first-time buyers don’t spend beyond their means, they need to be fully prepared to purchase the right house, at the right price. Getting pre-approved gives buyers the opportunity to consider multiple options, during a time-sensitive decision period,” she says.
Source: Myke Thomas, Calgary Sun
