I remember growing up in Alberta (holla Edmonton!) with my family, and owning a home was just a given. It’s all relative, but prices were such that owning wasn’t even a question. Real estate has always been something my mom said we should own, but I honestly never thought it was a possibility fast forwarding 30 years living in Vancouver. I moved here in 2004 and rented my way through my 20’s, and almost my 30’s… until we bought our first place this year! I thought it might be helpful to share how I made this happen in case you’re in a similar situation, or even just thinking about what this looks like for you.
Vancouver real estate is notoriously pricy. While I grew up with a yard, stairs, and basements, getting something that fits this description wasn’t going to happen for a budget less than 3 million dollars. This means many people live in condos here in Vancouver, and yes, even raise families in them. Think New York City, only not.
Our situation was a little bit unique as we bought the place we rented for the last 3 years from our very good friends. We treated our place like it was our home and loved it so much; when our lease term expired and our friends were ready to sell, we started the discussion. It was a lot easier working on this with our good friends, as we all had each other’s best interest in mind. We were first time home buyers, but luckily our friends had done it 3 times prior, and could help to guide our process. They introduced us to their mortgage broker (more on this below), real estate agent, and we were off to the races. While every situation is unique, maybe some of my process can help yours!
CHECK OUT THE MARKET
Even though we were purchasing the place we were living in, it was important for me to check out what was on the market. It goes without saying that there will always be other options out there, but we really broke down what our must haves were before we committed. Because we were looking for a two bedroom, two bathroom, two parking with patio, downtown, the choices were limited, and the places that were available were either out of our price range, or had undesirable layouts. There were times I thought we would have to downsize, but it was important to me to stay in our desired ‘hood (downtown!), with the number of bedrooms/bathrooms we wanted, so we fought hard to make it happen. I felt peace of mind knowing we had a gem, and it made it easier to commit. That said, our place needs updating/renovation which was fine with us (i.e that House Hunters “but it’s NOT granite!” moment didn’t apply to us). We plan on starting with the kitchen, followed by the floors and bathroom. We knew we’d never find a place exactly our taste, and look forward to creating something unique to us.
Being realistic with what we could get for what we could spend was the first part of our process, and without going into pricing detail, a quick Google search will give you the stats: in Vancouver, you’re looking at over $1000/sq foot. I know places that are currently building for $1400/sq foot… I’ll leave that there for a moment. In other words… in Vancouver, you have to get comfortable with compromise. It’s not abnormal for buyers to cycle through multiple offers on multiple places to have their efforts result in disappointment. Regardless of what it takes, getting into the property ladder is important to do because it really is an investment in your future (yes, mom, you win). Even though it was hard for us to make it happen, and we definitely understand the term ‘house poor’ now, it’s really like holding your money in another account. Realistically, we stretched ourselves to get this place, but in the long run, it will pay off, and we will rebuild our savings as time goes on.
Saving for the downpayment is something I was doing for years completely inadvertently. As a corporate business owner, I set up my salary to pay out money through my corporate account. I kept funds in my business account, building them up for a nest egg. I always knew that would be a home one day, and the timing and funds lined up. It was important to me to put as big a downpayment as possible in order to keep our mortgage low (and to be able to qualify for the right amount!). I was NEVER good with money, I LOVE to spend, but saving for a home was the most rewarding thing that I’ve ever done. It felt amazing to have a large down payment to use that I worked really hard for. As my mortgage broker said, most people who are buying in this market at this age have an early inheritance of a large sum of money, or they have downsized significantly into what they can afford… or moved out of the city completely. The latter two are definitely nothing to be ashamed of, and just getting INTO the market is the most important thing. Note: don’t forget you can pull out your RRSP’s penalty-free for your first time home purchase, along with certain grants, so look into your options with your financial planner or realtor.
There are plenty of hidden costs with buying a home, from realtor fees, closing costs such as property transfer tax and lawyer fees, property tax, and strata fees. These can really add up, so getting an accurate assessment of these from your mortgage broker is helpful to your planning process. Condo living also means strata fees (monthly payments to maintain the building) so make sure you can afford that on top of your mortgage. Note: if you’re buying a condo, comb over those strata minutes and make sure the contingency fund is strong since any major work may require more money from the owners.
The best thing we did was work with a mortgage broker to help us get a mortgage. They really do walk you through the process and act as a support system during the whole shopping around process, letting you know exactly what they need along the way (spoiler alert: a LOT of paperwork you’ll hate tracking down!). It’s super stressful waiting for financing to secure, and a good mortgage broker breaks down what you can expect, and will fight to work around any special circumstances, which for me, was the fact that my business made so much more than I paid myself, and therefore, I didn’t look ideal on paper. They know all the work arounds for your situation, and only get paid once the mortgage finances (the bank pays the broker a finder/deal fee). There were many times I called ours freaking out and she calmed my nerves with the reality of the situation.
And there you have it! I wouldn’t change a thing, and couldn’t be happier with how everything turned out. Happy house hunting!