First-time homebuyers willing to break budget for right house – Rising real estate prices force many to cut back lifestyle

The percentage of first-time home buyers in Calgary who are willing to break their budget for the right house is the highest in Canada, according to a new report by BMO.

The 2014 First-Time Home Buyers Report, released Tuesday, said 54 per cent of those in Calgary would do so compared with the national average of 33 per cent.

They are also expecting to pay more.

The report said 50 per cent of Calgary buyers say their time line has been delayed due to rising real estate prices and 68 per cent have made cutbacks to their lifestyle in order to save for their first home.

The BMO survey found that first-time buyers in Calgary have a budget of $363,400 for a new home. For Canadians, their budget this year is $316,100 which is up from $300,000 the year before. The BMO report did not look at budget expectations on a city level for its survey last year.

Laura Parsons, mortgage expert with the BMO Bank of Montreal in Calgary, said in Calgary many parents are helping their children get into homeownership.

“The biggest thing I’m seeing . . . they are just cautious and they’re afraid,” said Parsons. “I don’t think it’s too far out of their reach. There’s lots of condos available. Townhomes . . . But the like the up and coming Y Generation they are actually picky about where they move. They’re also cautious . . . It’s a big leap.

“What people are finding, especially the generation today, is they don’t even know how to get into homeownership.”

Parsons cautioned that first-time buyers should get pre-approved mortgages and not enter into something they can’t afford, particulary now in the Calgary market with low inventory levels raising overall prices and in some cases creating bidding wars for some homes that are for sale.

“Truthfully, I think the only thing in the way of most people getting out of renting is a strategy and feeling that they’re in control and they know what they’re doing,” said Parsons.

In February, the average MLS sale price in the city of Calgary was $482,530. It was $407,540 in Alberta and $406,372 in Canada.

The BMO report said first-time home buyers in Calgary expect to make a downpayment of 16.8 per cent. Also, 30 per cent are expecting parents/relatives to help with their purchase.

For Albertans, the price range for first-time buyers is $364,700, down from $378,685 last year, with a downpayment of 15 per cent. In Alberta, the survey said 37 per cent are willing to break their budget for the right house and 40 per cent have made cutbacks to their lifestyle in order to save for their first home. Also, 26 per cent in the province are expecting parents/relatives to help with their purchase.

Nationally, the average downpayment percentage has remained unchanged from last year at 16 per cent.

The report said 30 per cent of Canadian first-time buyers expect parents or family to assist in their purchase; 61 per cent have made cutbacks to their lifestyle in order to save for their first home; 60 per cent say their home-buying timeline has been delayed, with 39 per cent citing rising real estate prices as the main reason for delay.

“In a real estate market such as Canada’s, where prices have been consistently rising, those who put off their purchase need to ensure that the rate at which they are saving outpaces price gains. Otherwise, they may find themselves further behind in the long run,” said Parsons.

According to the Calgary Real Estate Board, year-to-date, until March 17, the following were the average MLS sale prices by category and percentage increase from the same period last year: total city, $476,079, 5.54 per cent; single-family, $541,364, 6.08 per cent; condo apartment, $318,790, 10.22 per cent; condo townhouse, $370,514, 12.39 per cent; and towns outside Calgary, $404,218, 13.29 per cent.

The following are the median prices: total city, $424,900, 7.57 per cent; single-family, $475,000, 12.29 per cent; condo apartment, $283,000, 10.98 per cent; condo townhouse, $332,545, 12.18 per cent; and towns outside Calgary, $378,500, 11.18 per cent.

 

© Copyright (c) The Calgary Herald

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