Will we ever be able to afford a home?


Will we ever be able to afford our own home?

Dear David,

My fiancée and I were shopping for homes a few years ago. We held off buying so we could save a larger down payment. Now the market has gone crazy and our dreams seem out of reach. Will we ever be able to afford our own home? — CRUSHED

DEAR CRUSHED: I advise all first-time buyers to get a foothold in the market as soon as they can, for this very reason. Through the course of my career, I’ve seen nearly every one my first-time buyers shop at their maximum affordability. Some stepped back with the intention of saving more, but with home values changing so quickly, they did so at the risk of being priced out of the market. Even in 2015, when homes were appreciating at just four-to-five percent each year, folks couldn’t save fast enough to keep up.

So where does a first-time buyer go from here? The answer is forward, but with a different strategy. The right time to buy was yesterday, but today is still possible if you’re willing to consider some alternatives.

I suggest getting into the market with whatever you can afford. This may be a condo apartment instead of a house, or it may be an out-of-town investment property.

Many of today’s young buyers are planning career paths that include moving to more affordable area. If your job doesn’t allow for this, you might consider buying a property in a smaller centre and renting it out, which is a great way to build equity.

This may also be the time to discuss an investment partnership with someone in your circle: your parents, a family member, a high school buddy, or even a group of friends. In each of these cases, you can structure co-ownership like a business relationship.

There are always people saying that the real estate bubble is about to burst, but history tells us otherwise. Our local market has seen some small corrections over the last 50 years, but these have typically come and gone rather quickly.

It’s nearly impossible to time your purchase to the next correction, but that doesn’t mean that things will keep spiraling forever. Over the course of the next five to ten years, I suspect major banks will change their mortgage amortization terms from 25 years to 35, or even 40 to 50 years as is common in Europe and Asia. But I wouldn’t be waiting around for this to happen. You need to do what you can today.

PRO TIP: When it comes to real estate, getting a foot in the door may mean doing something you hadn’t considered. I suggest getting some professional advice and examining the road to home ownership through a different lens. Secure your piece of the pie, and the rest will take care of itself. #Advice #AskDavid #TheNegotiator

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.