If you were born in Vancouver in the last 30 years, somebody older than you has probably said that you won’t be able to afford a home by the time you grow up. Comments like these always got to me as a child who was privileged to grow up in one of the most beautiful cities in the world. I still find that young professionals are graduating from university and starting their careers but still don’t think they can afford a home in the city they grew up in. Here are the four most common objections I get from my future first-time homebuyer clients.
“Homes in Vancouver are so expensive.”
This is correct! Home prices in Vancouver are constantly reaching new highs, and so are the surrounding areas. Maybe it is a little ambitious to think that your first home purchase is a downtown condo. However, that doesn’t mean that you can’t afford a home at all. I often tell my clients to consider investment properties in the surrounding areas of the Lower Mainland. An investment property will still appreciate over the years while earning you a monthly income to help pay your mortgage. If home prices keep going up everywhere, wouldn’t it make sense to invest in our rapidly growing province?
“I can’t afford a mortgage; I just started my career, and I’m still paying student loans.”
Have you ever spoken to a mortgage broker? Most people count themselves out before they even look into what they can afford. The best part about meeting with a mortgage broker is that even if you find out you can’t afford a home, they’ll help you understand what you need to do to afford one in the future. They’ll also open your eyes to more options that you may not have heard of, like a guarantor or parent co-signer.
“Great, now I qualify for a mortgage; I still don’t have money for a down payment.”
This is the biggest challenge that first-time homebuyers face in Vancouver. Coming up with a 5% down payment is a lot for anyone, let alone a young professional who may still have student loans or other debt. The harsh reality is that 95% of first-time homebuyers in Canada get money from family or other sources to help with the down payment. The best advice is to understand that getting into the market provides a ton of value, and it’s worth getting creative to come up with the down payment.
“My parents won’t just give me a down payment.”
This is where we have to get creative and make it worth your parents’ while. Don’t ask for free money; ask for an investment. Your parents likely have access to loans at much more competitive rates than what a bank would offer you. If your parents invest in 5% of your home purchase by helping with the down payment, give them 5% of the value when you go to sell. Approach the topic with them like a business proposal and show them how you intend to make the necessary payments and what kind of returns they can expect on their investment. Like we established earlier, home prices in the Lower Mainland are high and getting higher. Make it worth their while, and maybe that’ll help with the down payment.
A lot of what you just read may seem easier on paper than in real life. As you already know, Vancouver is one of the most expensive cities globally and can be very unaffordable to the average individual. You may have to start in Burnaby, Port Moody, North Shore, etc., but building equity in the market is an essential step towards buying your ideal property in the future. My job isn’t to tell you that it’s easy, but to show you how it’s possible and why it would benefit you so greatly in the long term.