From the North Shore to White Rock to UBC to Chilliwack, first-time buyers continue to make inroads into the Lower Mainland’s booming real estate market. Spurred on by continued low interest rates and often taking advantage of a helping parental hand, these purchasers are smart and committed.
Here we take a look at the top five trends among this savvy, growing demographic.
#1. Transit Oriented
Environmentally sophisticated, first-time buyers increasingly embrace a lifestyle that’s less reliant on private vehicles, meaning proximity to transit is a major factor in where they purchase. Transit-friendly neighbourhoods like the Cambie Corridor, Metrotown, Brentwood and the new downtown Surrey are the new superstars for this demographic.
They’ve also done their Car Math 101. A single parking stall typically adds $20,000 to $35,000 to cost of a downtown Vancouver apartment, and even in suburban areas, it’s estimated a stall can account for 20 per cent or more of the cost of a new suite. Add in the ongoing costs of insurance and maintenance, and many first time buyers are simply saying “no” to owning a vehicle. They’ll put that extra money toward a down payment or paying off their mortgage faster, thank you very much. In fact, according to data compiled by ICBC and analyzed by Metro Vancouver earlier this year, some are taking it one step further and not even bothering to get a driver’s license.
#2. Space and Amenities
In the city, two heavyweights in the buying decision are space functionality and proximity to amenities. To make the move from renting, many first-timers are willing sacrifice size as long as the space functions well. Savvy developers are responding with increasingly innovative ways to make smaller units multi-purpose — center islands that expand to become a dining table, full-height sliding doors that allow interior rooms to be combined when entertaining, tech nooks tucked below a staircase, and so on.
Urban amenities are also essential to this demographic since they tend to view them as an extension of their living room. Many will forsake entertaining at home altogether, preferring instead to meet friends at the local coffee shop or restaurant. Bonus: no dishes to clean up after.
#3. Migration to the 'Burbs
Whether it’s the ability to own a larger home or simply a desire to pay less than a comparable home in the city, moving to the suburbs is one enticing alternative to existing urban centres. For many, the primary motivator is being able to purchase a home with a yard, enough bedrooms to raise a family, and perhaps even room left over for a man cave or gal gallery. Others want a quieter, more rural neighbourhood. For some, the idea of paying less to own than to rent in a high-demand neighbourhood like Kits or West End is the final motivator.
While there’s no question these home offer greater bang for the buck, it can be a fine balance between the cheaper initial cost of housing and the ongoing added expenses of a lengthy commute. Of note, however, are the number of outlying areas where once a critical mass of new homes is achieved, new amenities and jobs follow. Prime examples of this are Yorkson in Langley and Morgan Heights in South Surrey.
#4. The Bank of Mom and Dad Gains Strength
Although it’s long been one option in the home buying toolbox, the Bank of Mom and Dad (BMD) is rapidly becoming a financial necessity for most first-time buyers. In fact, according to a recent survey from the Bank of Montreal, today some 40 per cent of first-time buyers in Metro Vancouver expect financial assistance from their parents to help them get on the property ladder.
“Owning a home has always been a goal for us, but without the help of my fiance’s dad, we wouldn’t have been able to purchase a home, invest in our future and start building our family foundation,” says one 26-year-old first-time home buyer, adding that their mortgage payments will be only $300 more than their current rent.
Anecdotal evidence also suggests many BMDs are also helping out indirectly by allowing their adult children to remain at home longer with minimal or no rent payments, so they can save their own down payment.
#5. Cyber Savvy
Online research continues gaining momentum especially with younger first-time buyers. According to Shaadi Faris, vice-president of Intergulf, “the extensive online research conducted by homebuyers is highly evident. Buyers are coming to us with knowledge of how the purchase process works, know what specific features and dimensions they are looking for, and have firm figures in mind.”
Social media, too, is changing how buyers shop. Many sales representatives report buyers coming into a presentation centre, liking what they see, and within minutes connecting with friends or partners for their input.
Want more first-time home buyer trend data? Below is an infographic from the Canada Mortgage and Housing Corporation on the results of its 2014 First-Time Home Buyers Survey.