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What first-time buyers really need: affordable housing prices

Prospective buyers look at homes in a new sub-division in Lakeside, N.S., on April 15, 2010.

PAUL DARROW/paul darrow The Globe and Mail

While mortgage brokers are pressing the federal government to bring back 30-year mortgages and give first-time buyers a bigger tax break, Globe and Mail readers are not convinced that easing mortgage rules is the answer to the problem.

When the Globe and Mail asked readers in an online poll whether Ottawa should make it easier for first-time buyers to enter the real estate market, only 40 per cent of the nearly 2,500 respondents said yes, first-time buyers deserve a break.

"First-time buyers have all-time low rates, realistic 25-year terms, and minimum 5-per-cent down payments," one reader wrote in our comments section. "If they can't afford it, then the prices are too high. The hurdle is low enough for Canadians."

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So what would help new buyers struggling to enter the real estate market? To find out, we asked first-time buyers in a recent community callout about the biggest challenges they face. Some of them were interviewed for a housing feature in Report on Business.

Many of the readers who answered our callout said high prices were the biggest obstacle to buying their first home.

"The biggest challenge I face is affordability," said Dustin Strong, a 34-year-old Vancouver renter looking for a home in the $500,000 range. "I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent."

"Our biggest challenge is saving for a down payment in a market where the average prices of houses increase faster than savings accumulate, and where rentals run the price of mortgages," said Jennifer Forkes, a 36-year-old Toronto renter.

Has it become harder to qualify for a mortgage? It sure has, said Andrew Kavanagh, a 24-year-old looking for a condo in downtown Toronto. "Having the 20-per-cent down payment I am aiming for will not be an issue. However, qualifying for a mortgage will be a huge challenge considering the bank's requirements."

"OSAP is the reason I was able to secure my career job, but it also seems to be the reason I keep getting denied a mortgage," said Cassandra, a 25-year-old looking for a detached home in Niagara Falls. "It's rough because it took me and my fiancé a while to save up for the down payment. Now we would just like someone to accept it!"

Market uncertainty and bubble-talk are also holding buyers back, said James Ellis, a 26-year-old looking for a house in Kingston, Ont., with a $250,000 budget. His biggest challenge, he said, is "determining if the value of a house now is inflated or not, and whether resale value in a few years will reflect the current value once the housing market equalizes."

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"Our main challenge is beating the fear of home prices falling on us," added Joseph, a 28-year-old looking for a detached house in Calgary. "That is what has kept us renting."

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About the Author
Report on Business Community Editor

Dianne Nice is community editor for Report on Business and writes about social media. Previously, she was The Globe's online editor for Careers and Personal Finance and has written about these topics for Report on Business and Globe Investor. More


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