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Purchase of a home remains an integral goal for Canadians, yet entry into the housing market has become more challenging due to rising costs and stagnating income growth.
Young buyers need to save aggressively and postpone other life milestones in order to purchase their first home. This article will examine some of the difficulties that accompany this process for first-time buyers.
Costs
Home buying can be expensive and daunting for first-time buyers who are unfamiliar with the market; saving enough for both the purchase price and a substantial down payment can seem impossible. The housing market slump has reduced ownership costs - the share оf household income required tо cover mortgage payments, property taxes and utilities - but they remain near record highs.
Coupled with near record low inventory levels and rising interest rates, homeownership remains prohibitively expensive for many would-be homebuyers looking tо break into the market. However, there's some positive news оn the horizon: mortgage rates are coming down, which could make homeownership more attainable for some buyers.
Governments оn all levels - local, state and federal - can implement policies tо increase availability оf affordable housing. Reforming zoning restrictions tо encourage more starter home construction may spur development; financial assistance programs for first-time homebuyers make home ownership more affordable as well.
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First-time buyers face unique financial hurdles. Their incomes tend to be lower than that of homeowners, which makes saving for a down payment and living costs more challenging than with existing homes. Furthermore, higher mortgage rates and lack of affordable properties compound these difficulties further.
Realtors report that investors and cash buyers are purchasing many homes on the market, which limits supply and drives up prices and rents. Buyers who find themselves outbid repeatedly by well-heeled competitors can find it emotionally and financially draining, especially when homes they desire are out of their budgets.
First-time buyers face many hurdles in entering the housing market, reflecting both economic and social forces that make homeownership harder than in past generations. There are steps homebuilders and mortgage lenders can take to make homeownership more attainable, including adopting innovative construction methods with reduced costs or financial assistance programs designed to help people reach their goals.
Mortgages
Many buyers struggle to save enough money in order to qualify for a mortgage loan, with 20 percent usually required as down payment - although certain loans offer lower minimum down payments or even no upfront fee at all.
Mortgages can vary significantly based on market and personal financial factors. Consulting a mortgage expert can help you understand your options and select one tailored to meet your individual circumstances.
Home ownership comes with unexpected expenses like property taxes and insurance premiums that may not fit everyone's current life stage or goals. Renting may be more appropriate; for others house hacking or co-buying may offer better solutions that allow entry with lower deposits and manageable monthly payments.
Location
Location is of great significance to first-time homebuyers as it often impacts their finances. Buyers must consider factors like commute times, school and workplace access and cultural/entertainment options in the area.
Although first-time buyers can find it challenging, they should remain persistent in their pursuit of homeownership. To do this successfully, educate themselves about the buying process and investigate all their financing and location options. Furthermore, working with an experienced real estate agent and mortgage advisor is invaluable in aiding this journey.
Corcoran believes that lower interest rates could spur a "ballistic market surge," making homes easier for buyers to afford and prompting sellers to list their properties for sale. Buyers should investigate first-time buyer programs and down payment assistance options while being open minded regarding desired home specifications and geographic area as this will help uncover hidden opportunities in an otherwise competitive market.