And they do their financial homework
Fiona Anderson
Sun
First-time homebuyers in British Columbia are opting for condominiums, not houses, unlike their counterparts in much of the rest of the country, according to a report by TD Canada Trust.
Thirty-seven per cent of British Columbians who had either bought a home in the past two years or planned to buy in the next two years said they had bought or intended to buy a condo, while there were only 21 per cent of respondents across the country who had bought or were looking at condos.
In B.C. 36 per cent of respondents had bought or hoped to buy a detached home, while across the country 58 per cent expected their first home to be a detached house.
“In B.C. it’s all about lifestyle and affordability,” said Barry Rathburn, manager of mobile mortgage specialists with TD Canada Trust on Vancouver Island.
People who want a condo often want to be near work or have a water view, or other amenities that might not come with a house, Rathburn said. And the price of houses in places like Vancouver -where the benchmark price for a detached home in June was close to $800,000 -puts buying a house out of reach for many families.
Rathburn believes, however, that outside the major urban centres more homebuyers would be looking for houses. In Nanaimo, for example, first-time homebuyers are buying an equal mix of town houses and condos, and some are buying small houses, he said.
But no matter where you are buying, a condo “is a fabulous first home,” Rathburn said. “You get in at a reasonable cost, it’s close to rent and you have ownership.”
And then, after owning a condo and building up equity, buyers can think of their dream home, he said.
A lot of buyers make the mistake of wanting their first home to be their dream home, Rathburn said.
But saving up enough money for a down payment could take years. Even saving for five years -which 26 per cent of first-time homebuyers in B.C. said they did or plan to do -would mean saving about $30,000 every year for a decent down payment on a $500,000 or $600,000 house.
“How many people can save $30,000 a year?” Rathburn asks.
Rathburn also thinks it’s a bad idea to spend too much time saving to increase the down payment. Provided you have enough for a down payment, you should get into a home as soon as possible, he said.
Because while you’re saving, the value of homes is going up and interest rates are going up, Rathburn said.
“And you’re trying to save faster than those things are going up.”
So it turns into a game of catch-up, he said.
Some good news from the survey: British Columbians do their financial research, with 94 per cent learning about mortgage options before signing on the dotted line and 93 per cent getting pre-approved. But B.C. homebuyers are also the most concerned about being able to afford their homes if interest rates rise, with 70 per cent citing that as a worry, compared to 59 per cent nationally.
That worry may come from the fact that many buyers in recent years have opted for variable-rate mortgages which move with the Bank of Canada’s overnight rate, Rathburn said. But that’s not to say a variable mortgage, compared to a fixed-rate mortgage, isn’t the way to go. It depends totally on the preferences of the buyer, he said.
The online survey received 1,000 responses, 131 of them from B.C.
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