10 February 2021

We’ve all heard about real estate in Guelph, Kitchener, Waterloo, the GTA and surrounding areas. Probably from a number of different sources.

“House prices continue to rise!”

“Record breaking year in real estate”

“We’re lucky we have such a strong market”

We get it...homeowners are loving it. They got into the market (some of them long before prices started to skyrocket) and now their home is making a sickening amount of money just by existing - no updates or renovations required. With value increases of over 20% per year, many homeowners are seeing their net worth increase by an amount larger than their annual salary!

But what about first-time buyers? What about the group of people who are starting to feel like the dream of homeownership is slowly becoming the nightmare of eternal renting - or living at home. These buyers need to suffer through every report, every conversation, every headline talking about how prices continue to rise. And even worse, they hear Realtors talking about how great it is. This isn’t one of those blogs.

Is the market strong? Sure...but that doesn’t mean it’s good. With prices soaring, things are becoming increasingly difficult for those who aren’t fortunate enough to already be in the market. And it’s not just sale prices. High rental rates are making it tough for people to save.

Imagine being a renter at the start of 2020. You decided that this was the year you were going to save as much as possible to get that down payment to buy your first home. You had seen some homes online around $300k and you had a clear goal in mind. Fast forward one year...it wasn’t easy and it took a lot of sacrificing, but you’ve managed to stick to your budget. You now have enough for the down payment on that $300k home! Just one thing...that $300k home is now worth $400k.

I hate to say it, but this is the reality we live in. This is our market and there’s only so much you can do to save. The advice in pretty much every first-time buyer blog is the same. Some of that advice is good. Like taking advantage of Tax Free Savings Accounts and borrowing from your RRSP. Other advice is annoyingly obvious. “Pay off debt”, “make coffee at home instead of going to Starbucks”, “eat less avocado toast”. I’ve even seen a blog where one of the items on the list said “save more”. Ummm...what? It’s too bad that nobody said it sooner because I’m sure that first-time buyers never realized they would have more money if they just saved more.

It’s easy to just sit here and say “this sucks for first time buyers” and not offer any solutions. So that’s what I’m going to do. Good luck, you’re screwed, enjoy your parents’ basement!

Not actually. Yes, it sucks. But that doesn’t mean there’s no hope. Things don’t always go according to plan and with the way that prices have increased, your plan A is probably going out the window. What doesn’t make sense is to stick with plan A even though there’s no chance of it working. But here’s some good news. After plan A comes plan B.

It may not be ideal, but the best solution may be to adjust your expectations. It’s exactly what I had to do when I was buying my first home. The market wasn’t quite as crazy at that point, but it was my only path to homeownership. I had a picture in my mind of what my first house was going to look like. It didn’t have to be detached, but a nice townhouse would do the trick. And I wanted it to be in Guelph. After all, that’s where most of my friends and family were. It was what would make the most sense for me. But what would make the most sense and what was affordable were two VERY different things.

After getting my finances in order, reality set in. The dream of a townhouse in Guelph was just that...a dream. But that didn’t mean that my search was over. It just meant that I needed to try plan B. I’d never lived in a condo before, but I realized it was the necessary first step to get my foot in the door. I couldn’t benefit from my home appreciating if I didn’t have a home. The market was competitive though and I happened to lose in competition. I took a shot, but the most I could pay still wasn’t enough. Luckily, the alphabet keeps going after A and B...on to plan C! Rather than finding a condo in Guelph, I needed to extend my search to Kitchener-Waterloo. That was when it finally happened. I had an offer accepted on a 600 square foot, two bedroom condo in Kitchener! It was basically a shoe box, but it was my shoe box.

I lived in that condo for a few years before taking the next step to a bigger home. A step that wouldn’t have been possible had I not adjusted my expectations. Getting into the market and having my home increase in value through renovations and just general market appreciation provided me with a greater down payment than I would’ve had if I had just given up on my home search. This approach has not just benefited me, but a number of my clients as well.

So my advice to first-time buyers is to reach out. Everyone's situation is different and there's no 'one size fits all' path to buying a home. Even if you’re not ready yet, just reach out. I’m always happy to chat and help you develop a plan. The market is tough, but homeownership is still possible. My job doesn’t start when you want to go see a house. It starts when you need some guidance...and the best part is that my advice is always free (see...you’re already “saving more”).

Garret Mott

REALTOR®

226.314.1600

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