Buying your first home as a newcomer can be intimidating. It is a life-changing experience with a home waiting for you in reward.
Buying a new home is an indicator of success. It is a safe and logical investment, provides security and can appreciate in value.
A survey by Ipsos Public Affairs shows that a substantial number of new immigrants buy homes within their first five years of arriving in Canada. An astounding 49% of the Immigrant respondents from Toronto were homeowners within five years.
According to the 2018 Canadian Housing Survey, 44% of 1,153,400 recent immigrants lived in a private dwelling owned by a household member.
When is the right time to buy your first home?
While being optimistic, you should temper your expectations with reality.
According to a 2018 survey by Statistics Canada, almost half of the first-time homebuyers nationally were under the age of 35.
Consider your line of work and create a realistic plan. Don’t stress yourself about how long it’ll take to get there. Focus on investing your efforts in the right direction. Your savings and credit will only go up with the right career and stability.
A 2019 study by Statistics Canada showed that the median pay for immigrants who become permanent residents is CA$31,900, among the highest recorded since 1981.
While it’s not the same for everyone, the reports should give you an idea of the situation around house ownership and a realistic plan for getting there.
Should Price matter?
Yes, Price is an essential factor when buying a new home. Do you spend the last of your savings on that detached home or look for a cheaper alternative in a more affordable neighbourhood? Or do you save up for a few more years? It’s all about compromise.
The data from the Ipsos survey showed that newcomers were usually willing to pay more than $700,000 for their first home- nearly $100,000 more than the average Canadian-born buyer.
It begs the question. How much should you invest in buying your first home? We’ll leave that to you. There are no correct answers. The smart way is to be aware of your situation and the cards you’ve been dealt. After all, it’s hard to enjoy any vista with a crippling mortgage.
Know when you can shell out the extra buck and when prudence is the better route. There’s no need to hurry.
As a prospective homeowner, you are at the mercy of the housing market. Newcomer destinations, major cities and hotspots carry the same exorbitant price tags.
But prices fluctuate and vary even among the most popular destinations- be on the lookout, and you might strike gold.
Some of the popular provinces as a newcomer include:
- Ontario- The province hosts almost half the working population for knowledge-based industries and accounts for nearly 37% of the Canadian GDP. Its two major cities, Toronto and Ottawa, are among the most multicultural cities with a welcoming attitude towards newcomers.
- Quebec- The province is known for its rich cultural heritage, the use of the French language and Maple syrup, among other things. Montreal and Quebec City are the most popular cities here. Canadian Real Estate Association (CREA) data shows that Saguenay, Quebec has the most affordable housing market rates as of June 2022.
- British Columbia- Known for its landscape and milder climate, the province is quickly becoming a favourite among newcomers. It was ranked the second most popular destination for immigrants in 2021.
- Alberta- The province boasts lower tax rates and receives more sunshine than the rest of Canada. It also has the beautiful Rocky Mountains.
A survey commissioned by Royal LePage found that 82% of newcomers choose to stay in their first city of residence. Breaking away from your first experience of Canada can be a challenge- but there’s a whole country out there. Don’t get fixated on the golden goose; look up other provinces and cities and put some extra thought before buying a new home.
Will the Government help?
Stressed? Overwhelmed? You need not feel alone and helpless. You will find the Canadian Government caters to many of your needs, including schemes for first-time home buyers. As a permanent or non-permanent resident authorized to work in Canada, you are eligible for the First-Time Home Buyer Incentive– provided all other conditions are met.
The scheme can help you reduce your monthly mortgage payments by 5% or 10% on purchasing a newly constructed home, an existing home or a mobile/manufactured home.
The Smart Guide to Buying your First Home
All this is not to say that the road ahead is smooth and without challenges. Finding and buying your first house is difficult without the added roadblocks you’ll face as a newcomer.
The market is coping with a shortage of Housing which will drive prices upwards for the foreseeable future. Most popular destinations will likely remain out of reach for most of the population.
But here’s a checklist to ensure you’re putting your best foot forward.
- Don’t jump the gun and get a house right away. Patience is key.
- Budget planning and setting- Understand what is within your means. Be realistic and set achievable targets.
- Financing (loan, down payment, etc.)- Be aware of Bank policies. They may vary according to your Immigration status.
- Regulations- Needless to say, you will need to brush up on Canadian laws and regulations if you intend to buy a new home in the future.
- Housing Prices: Be aware of the Canadian Real Estate Association’s (CREA) data on the housing market. Currently, some of the most affordable cities with low Average Home Prices are Saguenay, Quebec; Regina, Saskatchewan; and Quebec City.
- Rebates/ taxes- New home purchases are subject to the federal Goods and Services Tax (GST), but a partial rebate can be obtained if you plan to live in the home. Additionally, you will be paying an annual property tax to your Municipality.
- House inspections- it is recommended that you avail the services of a good home inspector before buying a new house in Canada. The inspectors will look for issues and ensure that your dream home is as advertised.
Are you ready to buy your first home?
Ultimately, how long it takes before you can afford a home in Canada is dependent on your situation. If your finances are tight- you could play the long game or look for less competitive housing markets. If you’re on the fence about housing prices- remember it could get much worse. Canadian mortgage rates are climbing with the inflation rate, and the Royal Bank of Canada recently downgraded its forecast for the Canadian housing market.
Undeterred, home ownership within the immigrant population is on a steady climb.
In time, you will join this growing list of newcomers whose lives have been transformed by Canadian Home-ownership. We wish you well on this journey and encourage you to share your experiences with us.