When it comes to purchasing a first home, buyers have regrets – mostly that they took so long to do it.
In that sense, Bryan Backman- Beharry is your typical homebuyer. The 32-year-old Calgarian recently purchased his first home, a three-bedroom bungalow in the southwest community of Killarney, after renting a condominium in the downtown core.
“I tend to be very cautious about major purchases, so I feel that I did sufficient due diligence and bought at a time that made financial sense for me,” he said. “I suppose my only regret is that I did not buy a house 10 years ago when they were much less expensive.”
Judging by the findings of a new report from TD Canada Trust, Backman-Beharry is far from alone in his sentiments. According to the 2012 TD Canada Trust First Time Home Buyers Report, the top three lessons learned from new homebuyers included making a bigger down payment (60%), budgeting better (60%) and buying sooner (55%).
According to Royal LePage, the average house price in Calgary has increased from $189,500 in 2002 to $429,000 in 2012.
The top reasons home buyers give for deciding when to buy their first home is they tire of paying rent (48%), get a full time job (31%) or want to start a family and need more space (31%). Many first time buyers say if they could do it again, they would have bought sooner (55%), however 60 per cent also say they wish they would have made a bigger down payment (likely requiring more time to save).
“After having rented a condo downtown, I decided it made more financial sense to be putting that money toward a mortgage and have something to show for it down the line,” said Backman- Beharry. “The Calgary housing market seems to be strong and improving every year, so I consider it a fairly safe investment.”
Like Backman-Beharry, the majority of first time buyers in the TD report said they were looking for a detached home (54%), with condos coming in a distant second (18%).
Amongst the top five most important features first time homebuyers considered when shopping for a home were price (97%), layout of the home (96%), number of bedrooms (95%), features of the home (92%) and size of backyard/garden (86%).
With nearly all buyers placing price as the top consideration, a report released by RBC Economics in May ranking affordability in Calgary amongst the best in Canada should come as good news. According to RBC’s Housing Trends and Affordability Report, affordability in the city has remained resilient despite Calgary’s status as one of the hottest real estate markets in the country with sales rising 21.3 per cent last month. As outlined in the report, purchasing a standard two-storey home would require 37.5 per cent of the average Calgarian’s pre-tax income, tying the city with Edmonton as the most affordable markets included in the study.
“The levels of Alberta’s measures remained among the lower, if not, the lowest, among the provinces,” said the RBC Report. “With such attractive affordability and a provincial economy that is ramping up considerably, it is not surprising to see home-resale activity taking off recently.”
Compare that to Vancouver and Toronto, where the same two-storey would require the average homeowner to part with 93 per cent and 62.6 per cent, respectively, of their pre-tax household income.
The TD report also revealed homeowners aren’t always prepared for the additional costs associated with owning a home. According to TD, 29 per cent of buyers said they didn’t budget for on-going costs such as maintenance and utilities, while 13 per cent overlooked some of the one-time fees associated with buying a home, such as inspection fees and land transfer costs. It does appear that nearly all buyers did prepare for some additional cost however, as only six per cent didn’t budget for anything beyond the down payment and monthly mortgage payment.
For those looking at purchasing a home, Farhaneh Haque, director of mortgage advice, TD Canada Trust, has some advice on how to not get in over your head when putting a roof over it.
“Buying a home is the biggest investment most people will ever make, so it’s important to save a sizable down payment and prove to yourself that you are ready to take on the responsibility of a mortgage,” said Haque. “Start by comparing what it costs you to rent monthly to what it would cost if you owned your home. Remember, as a homeowner there are housing expenses such as property tax, insurance, repairs and utilities that should be factored in, in addition to your monthly mortgage payments.”
Are you a new home owner? What have you learned from the process of purchasing your first home? Any advice you would give to other purchasing their first home? Share your experience in the comments below.