Generation Y has many advantages over others, but when it comes to buying a first home it appears the "good old days" truly did belong to baby boomers.
Today's twentysomethings are not only having trouble earning meaningful pay cheques to put toward a mortgage, but the Canadian government has made it even tougher by tightening lending rules to keep a leash on the housing market. Combine this with a decade-long rise in house prices across Canada, it's no surprise Gen Y is feeling down about buying their first home.
While it's a discouraging time for young people with a dream of owning their first home, it's not impossible for Gen Y to buy. At Vancouver-based Urban Analytics, we've watched the evolving first-time homebuyer market for years and can offer some advice to young people - Metro Vancouver in particular - who are contemplating buying their first home.
Tip #1 - Consider "best buy" locations (not the electronics store)
By "best buy" we mean the five areas in Metro Vancouver with the largest selection of new condos and townhomes. These include: Richmond, Coquitlam, Southeast False Creek, Surrey Central, and neighbourhoods south of the Fraser. In fact, Richmond is now the most competitive new condominium market in the region as developers have become increasingly aggressive in their fight for market share. Six major new condo projects totaling more than 1,000 units have launched in Richmond in the past two months alone. Another five condo projects are potentially launching in the next few months. Now may be the time to invest in Richmond.
Tip #2 - Think like Donald Trump: Negotiate
When it comes to buying a new condo unit from a plan, don't be afraid to ask for a discount or for an upgrade feature to be included. Your real estate agent can also do this for you - just let them know what you want. Some developers are more willing to negotiate than others, depending on their sales targets or those of their lender, so it never hurts to make a pitch.
More and more developers are offering incentives these days. Some include: Bohème on East Hastings where buyers of units more than $330,000 receive either a new Fiat car or $15,000 in cash; at The Rolston in downtown Vancouver, renters who buy in the building receive $1,000 off their mortgage payments for three years, or $500 off for six years; at the Wall Centre Central Park in Burnaby, buyers receive a 3.2-per-cent credit off purchase price. These incentives result in significant savings.
Tip #3 - Tis' the Season? Or is it?
Spring typically brings with it a sense of renewal, which seems to get more people thinking of buying a new home, is a traditionally strong home-buying season. That means more competition for properties, and less incentive from sellers to offer discounts. Unless your timing is tight, consider buying during traditionally slower times of the year such as mid-summer when there are fewer buyers, and sellers and developers may be more willing to negotiate.
Tip #4 - Become a Landlord
Buying a house doesn't have to mean carrying the entire mortgage on your own. A lot of first-time homebuyers purchase properties with two or more bedrooms or units, and rent out the extras to roommates or tenants. Becoming a landlord isn't for everyone, but if you're up for a little extra work, and some company, it could make the difference between changing your status from renter to buyer.
Tip #5 - Get out of Town
Sure downtown is convenient, Yaletown is cool and Kitsilano has the beach, but if you're willing to experience life outside of Vancouver's city limits there are some great neighbourhoods (with attractive pricing) to pay attention to. These areas include places such as Richmond, Burnaby, New Westminster, Surrey and Coquitlam. These expanding city centres are also connected to Vancouver by public transit.