Myths, facts and tips for first-time homebuyers in Ottawa
If you are worried you are priced out of the real estate market as a first-time homebuyer, realtor Taylor Bennett is determined to reassure.
"With all the recent activity and changes to the real estate market in the past 24-months, along with the dramatic change to our world caused by the pandemic, it's easy for misinformation and myths to become popular beliefs," explains Bennett.
Bennett says there are many misconceptions about the most expensive purchase you will make.
Myth: "Homes are too expensive, I missed out."
Fact: There are over 300 active residential listings under $450,000.
"The great thing about a city like Ottawa is that despite the recent surge in prices over the last two years, there are still plenty of affordable homes a short 15-20 minute drive from some of our suburbs to the towns on the outskirts of Ottawa," says Bennett.
At the beginning of this week, Bennett said there were 300 active listings for homes under $425,000, or 33 per cent less than the Ottawa average of $639,000.
"While being in Ottawa may be the preferred location for many buyers, with many jobs remaining virtual or offering remote-work options, this widens the search area for many buyers and makes homeownership far more affordable," explains Bennett.
Myth: "I'll wait to save more/pay off debt."
Fact: The average Ottawa home increases by over $41,000 annually.
“Saving money can be difficult, especially for a freshly graduated young professional entering the working world,” acknowledges the realtor.
“The average graduate leaves school with over $35,000 in debt (student loans, car payments, credit card bills, etc...), and the average salary for a 21-25 year old in Ottawa is $61,000.”
Bennett says, "When your debt is over half of your salary, it's only logical to want to make a dent in your debt before committing to a mortgage but owning a home in a stable city like Ottawa can be one of the most effective ways of saving money quickly."
Myth: "My parents did this on their own, I should be able to, too."
Fact: Since 1980, the average Ottawa home has increased by more than 10x, incomes have not.
- 1980: $62,748
- 2021: $639,631
Bennett’s research shows many Baby Boomers bought their first home in the 1980s when the average car was $5,500, the average income was $11,000.
"The world was VERY different back then." (He jokes that he doesn’t just mean hairstyles--as perms were all the rage.)
"It's human nature to want to compare yourself to your parents, the simple fact is that too much has changed. For many of my young clients, there is strong resistance to asking for or accepting help from their parents once they have left their family home," says the millennial realtor.
"Part of becoming an adult is becoming financially independent and asking mom and dad for help can feel like taking a step back," says Bennett, adding his advice to young first-time buyers is not to look at this as "parental control" but instead as a "business partnership".
He suggests many Baby Boomers are looking for investment opportunities to aid in their retirement, so structuring a mutually beneficial deal, or partnership with parents and kids can help both parties.
Myth: "I want to wait until I find my dream home."
Fact: Your first home won't be your "forever home".
“It used to be common for people to buy one home and reside in it for 30 plus years while raising their families, but today on average people change homes every 5-7 years," says Bennett.
"'Dream homes' today come at 'dream prices' and are simply too expensive for most first-time homebuyer budgets. While it's great to aspire to have a 'dream home', the reality is that most people have to move up the property ladder 4-6 times before they are in a position to buy their dream home."
Myth: "I should only buy if my mortgage payment is less than my rent."
Fact: Homeownership isn't only about monthly payments, it's about building long-term wealth.
In the goal of long-term wealth building, Bennett says, "When calculating the monthly costs of homeownership (mortgage, utilities, insurance, etc...) is common for those monthly costs to exceed what someone may be paying in rent. While renting is easier (less responsibility, fewer taxes, fewer headaches, etc...), 100 per cent of each rent payment goes towards paying some else's mortgage and helping someone else build their wealth."
"A monthly mortgage payment helps pay down the principal of your mortgage, plus the home itself is increasing in value - both of these contribute to increasing your home equity and helps build your wealth," Bennett says.
He add that homeownership brings with it some tax benefits (capital gains, tax implications, etc...) and opportunities to reap the rewards of any home improvements.
CTVNews.ca Top Stories
4th Indian national arrested, charged with murder of Hardeep Singh Nijjar
Homicide investigators in B.C. say murder charges have been laid against a fourth Indian national in connection to the killing of Sikh activist Hardeep Singh Nijjar outside a Surrey gurdwara last year.
Man arrested after allegedly caught trespassing at Drake's Bridle Path mansion
Toronto police say a man has been taken into custody after he was allegedly caught trespassing at Drake's mansion in Bridle Path Saturday afternoon.
Wildfire that forced evacuation of Fort Nelson, B.C., caused by tree falling on wires, mayor says
The wildfire that prompted the evacuation of more than 3,000 people near Fort Nelson, B.C., was caused by a tree falling on wires, according to the municipality's mayor.
Switzerland's Nemo wins 68th Eurovision Song Contest
Swiss singer Nemo won the 68th Eurovision Song Contest on Saturday night with “The Code,” an operatic ode to the singer’s journey toward embracing their nongender identity.
Couple randomly attacked, 1 stabbed, by group of teens in Toronto, police say
A man has been transported to hospital after police say he was stabbed in a random attack carried out by a group of teens in Toronto on Friday night.
'I am angry': Alberta farmers will continue fight over world class motorsport resort
The rolling hills leading to the hamlet of Rosebud are dotted with sprawling farms and cattle pastures -- and a sign sporting a simple message: No Race Track.
IN PICTURES Northern lights dance across the night sky in southern Ont.
From London, to Grand Bend, Collingwood and Guelph, here are some highlights of Friday night and Saturday morning's northern lights display.
Ron Ellis, who played over 1,000 games with Maple Leafs, dead at 79
Ron Ellis, who played over 1,000 games with the Toronto Maple Leafs and was a member of Canada's team at the 1972 Summit Series, has died at age 79.
opinion How to use your credit card as a powerful wealth-building tool
Irresponsibly using a credit card can land you in financial trouble, but personal finance columnist Christopher Liew says when used properly, it can be a powerful wealth-building tool that can help grow your credit profile and create new opportunities.