Housing market: incoming buyers struggle to buy homes

She said the astronomical rise in the average home price in Canada has made 39-year-old Jennifer Charbonneau more frustrated than ever.

“The fact that even though we can afford … just under $2,000 a month for rent, but we don’t qualify for a loan to be able to pay off a mortgage of $1,000 a month, I find that like a slap in the face,” she told CTVNews.ca. In a phone interview on Wednesday. “We have come to realize that [owning a home] It won’t happen in our lifetime.”

Charbonneau said she and her husband have been looking to buy their first home in Quebec about 10 years ago. After renting an apartment in Montreal, Charbonneau moved to Laval, Que. With her husband and 3 children with special needs in July 2020, and now we are renting a duplex.

Her family’s search for a home has been particularly difficult since April 2021, when Charbonneau was laid off from her job as a receptionist at a law firm. She said neither she nor her husband had permanent jobs at the moment, and could not get approval for a loan. Both were living from one paycheck to the next without financial support from relatives, barely making a living.

Before losing her job, Charbonneau said she and her husband were approved for a mortgage that would have allowed them to buy a home for up to $200,000.

“We don’t need any marble countertops, we just need a functional home with three bedrooms, and we can’t find anything that’s in our price bracket,” she said.

Charbonneau said the family is still looking for a home under $350,000, but has noticed an increase in home prices over the years in their area, making that goal increasingly unrealistic.

“pessimism” among home users for the first time

It seems as if a number of other Canadians feel the same way. According to a recent survey by Canada Life, an insurance and financial services company, nearly 50 percent of respondents who rented said they expect to do so indefinitely, or are unsure of when to buy a home.

“There is a certain amount of pessimism about the ability to enter the housing market right now,” Paul Orlander, executive vice president of individual clients at Canada Life, told CTVNews.ca Thursday in a phone interview. “Current challenges related to the housing market make it difficult for most tenants to know how, in a five-year time frame, they will transition from rent to home ownership.”

Additionally, 64 percent of survey respondents said that new homeowners would only be able to enter the housing market with financial support from others. Charbonneau said she felt the same way, noting that among her friends, the only way some of them were able to buy a condominium or a house was to get financial support from their parents who contributed to the down payment.

“They all enjoyed that kind of financial advantage,” she said. “Some of these friends, they ask, ‘Why don’t you have a home? “Tell them we don’t have a mom and dad to help us, and they kind of give us a funny look as if your parents were supposed to help you, but we’re not in that situation.”

Orlander said that the reason for much of the pessimism expressed in the results of this survey stems from rising housing prices. Nassma Ali is a Toronto-based real estate broker, and founder of One Group Toronto Real Estate with Remax Hallmark Realty. Although certain parts of Ontario, for example, have seen a slowdown in activity within local markets, others are still seeing residential property prices rise, she said. With rising interest rates and inflation, Ali said, this increases the financial burden on homebuyers, especially those looking to buy a home for the first time.

“The market has been dependent on steroids, and usually the people who fall by the wayside are the first-time buyers,” she told CTVNews.ca in a phone interview on Wednesday. “First-time buyers are the ones who constantly end up losing out on multiple offers, and they get really frustrated.”

She said first-time home buyers are particularly at risk given the fact that they haven’t entered the market yet, and don’t have any stocks to rely on as a result.

“If you already own it, it doesn’t really matter because you’re selling in the same market you’re buying,” she said. “But for the buyer, they’re just jumping in with no equity.”

Ali said higher interest rates are also affecting the affordability of homes. Besides the rising cost of living, potential homeowners are likely to be concerned about being able to make ends meet, she said.

“Going into home ownership is a challenge for potential homeowners,” Orlander said. People are concerned about the pressure on their personal finances because they see the prices of goods and services rising due to inflation.

“For many Canadians, those prices are rising faster than their earnings.”

Some hope to find their “endgame home”

Some potential homeowners, such as Liam Keeling, say they are optimistic about the future. He said the 25-year-old and his girlfriend, who lives in Coburg, Ont., had been looking for a detached home to buy for the past two years.

With the interest rate increases that the Bank of Canada has imposed over the past few months, Keeling said he has noticed that homes in his area are becoming more affordable. He said that larger properties with square footage are starting to fall within his $400,000-$550,000 budget line, and more homes are being sold at amounts closer to what they’re listed on.

“We can buy more of our finished house, instead of our stone house,” Keeling told CTVNews.ca Tuesday in a phone interview.

But he said that before that, he was in situations where he would be bidding up to $70,000, even after making an offer that actually exceeded the asking price. This was especially frustrating after he realized that he and his girlfriend did not qualify for the incentive to buy a home for the first time in Canada, where their combined annual income exceeds $120,000.

However, it may take some time before the perfect home can be listed at a price that’s within his budget, Keeling said.

“[We’re] Kind of getting caught in the middle as interest rates are starting to go up, so you’ll pay more for each month [mortgage payment]But housing prices are still exorbitant.” “So you will pay too [more] in advance of your first payment.”

As a result, Keeling said he and his girlfriend would start looking again more actively in August or September to see the impact of the next interest rate hike in July on home prices. But he hopes they can buy a home before winter, after they’ve already set the interest rate, he said.

“Looking in the same price range [now]’We’ve been seeing a little bit nicer homes over the last couple of months here,'” he said. ‘Definitely in the future, there are going to be some great homes coming into our price range as interest rates go up in the future.’

However, Charbonneau said she does not hope her situation will improve any time soon.

“I’ve been an optimist for 38 years of my life, it’s only been the last year, and that’s what it is,” she said. “If things progress and get better, that’s great, but…in our lives, it just won’t happen.”

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