McClelland Minute - November 22, 2009

First Time Home Buyers are Ready

A recent survey by TD Canada Trust indicates the newest generation of first time home buyers is more willing to invest in real estate than their parents or grandparents were at the same age.  Today, 51% of the 18–34 age group are prepared for the responsibility of home ownership as opposed to 37% of Canadians a generation or two ago.

I suspect the reasons for this change are varied.  What we increasingly see are young people with income levels that qualify them for mortgage repayment plans but without all the necessary funds for the down payment.  Family members often step up with a gift or an interest free loan as they too believe home ownership is superior to renting.

This is reinforced in the survey with over 36% of today’s buyers requiring assistance as compared to 10% in the generation before.  And it is not only parents or grandparents getting involved; in fact, we often see siblings helping each other.  A single brother or sister may contribute to the down payment of a family member with children, so they can live in decent accommodation.

Location has become more important to the new age buyer as has attendant attributes such as schools and green space.  People are increasingly seeking low maintenance, energy efficient housing to start out in.  Naturally they will eventually trade up to a house with room for children, hobbies, or just to enjoy some separation from the neighbours.

First time home buyers in smaller communities often have no choice but to start out in an older home.  The price of entry can be considerably lower than the city but if their job is outside the community, then the cost of commuting has to be factored in.

In the city, renovated older homes priced appropriately will get a hard look but condos, townhouses, and new single family homes requiring landscaping or basement development are not far behind.  There are always opportunities for buyers with skill and energy to build “sweat” equity.  It is not a get rich – quick scheme, but the results usually make it worthwhile.  A prudent buyer though will be honest with themselves on what they can or cannot do. 

In thirty five years of marriage, my wife and I have improved three homes for resale, and built two (plus two farm shops and an indoor riding arena!).  Each time we gained a little bit more skill.  Over the years I have found that I like doing certain things like carpentry, wiring or landscaping, and prefer not to drywall or plumb. 

If you are a first time home owner and plan to do some renovations, start small.  Take on a room in the basement, or the interior of a garage.  If you don’t know how to do something, research it on the Internet, attend a course, or ask a professional.  Most are quite accommodating with “newbie’s”.

My colleagues and I have guided a number of first time home buyers over the years; to me it is one of the more enjoyable aspects of our practice.  After all, we all had to start somewhere.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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