Tips for Toronto’s First Time Home Buyers
A common gripe I hear from those who rent in Toronto is: I’ll never be able to get into the real estate market. And while it most definitely is hard for Toronto’s first time home buyers nowadays, it’s not quite fair to say that it used to be easy. Sure, luck could play into it, but choosing to buy a property does come with sacrifices – and it always has. First time home buyers have long been borrowing money from parents, buying in ‘up and coming’ areas, and purchasing properties that need A LOT of work. See my previous posts here and here on what first time home buyers have faced through the decades.
Let’s start with why you want to live in Toronto. Obviously, it’s great city! We are lucky to be surrounded by culture, parks, events, great restaurants, with so much of this being walkable. It IS a great lifestyle. And you likely work in the city, so obviously the commute type and time plays a factor. So what do you do?
For most, owning property has proven to be a good investment. And we have to pay to live somewhere, whether that’s rent or that’s a mortgage payment. And then there’s something about making a home for you and yours, it’s more than just a place to live. So in light of these things, how does one do this in Toronto when the average house price is $806,000? Here are some thoughts on navigating today’s real estate market for Toronto’s first time buyers. Hint: it involves some out-of-the-box thinking.
Get out of your comfort zone/neighbourhood: My wife and I pushed ourselves to buy our first home, both financially and in terms of our expectations. We felt lucky that we had two incomes and housing prices hadn’t yet gone crazy, at least not 15%+ a year crazy. However, we did buy a 2 bdrm row house in a not-so-sexy area that was in need of some love. Our backyard backed onto a mechanic’s garage and we we didn’t have a furnace! Wha?! Yeah, it had a ugly gas heater on the main floor, in-floor heating in the basement, and a gas fireplace in one bedroom. It was weird, but it ended up working really well, and we loved that house. This is city living. You will likely have to sacrifice size, location, and realign your expectations to call yourself a Toronto home owner.
Join forces: Ok, maybe the idea of co-buying a home is a little crazy, but it’s worth thinking about. Particularly given how much a condo costs to buy or rent. If you look at a city like Montreal, much of their housing within a close proximity to downtown is set up in a duplex, triplex – or more – style. Some of these are rentals, and some are condos. Do you really need the full house? Could we live on one floor of a house? Along that line of thinking, maybe you’re not getting a loan from your parents as much as you’re investing with them. They co-own a property and rent their unit, and you co-own and live in yours. Worth noting: budget extra for legal fees to draw up a co-ownership agreement!
Embrace minimalism: Many of us that grew up in and around the city may have been fortunate to have a large yard, your own room, a dining room and an eat-in kitchen. But guess what? Your parents probably didn’t start off with that house. There are also a lot more people wanting to live in this city, so either we make room, or get ready to spend a lot. Toronto Buyers need to adjust their expectations from the home they grew up in to what they really need. If we want to enjoy all the city has to offer and have that shorter or bikeable commute to work, I think we’ll need to embrace small space living. (See my suggestion for duplex living above.)
Pied-a-Terre: Maybe your forever home (a term I hate!) is not in Toronto and you purchase elsewhere as an investment or vacation property (the latter could still be rented to cover the costs) with thoughts of settling there at some point. Eventually these out-of-city areas won’t seem so distant and may even be the new hot spots (ahem, Prince Edward County). Friends of ours rented a large home in the city for years, but owned a small cottage property where they would spend most weekends and holidays. They recently ‘downsized’ and bought a 2 bdrm condo in the city. Although it’s tight when they have their kids at the condo, they own not one, but two properties – and for under $1M. Their cottage home gives them that extra space for storage, or just to sprawl out.
Yes, it’s hard to buy in Toronto these days. It can be defeating, but think about why you want to live here, maybe there’s a different way to get what you’re after. Have any thoughts or comments on the article? Let us know!
