Though real estate prices are soaring in Toronto, property sales have risen by 19% from the same time last year, reaching nearly 10,000 transactions. The standard price for a home in Toronto means that only those in the top 10% income bracket should be able to afford their own home. Despite this, new and young buyers are holding onto the dream of buying a property. Whether it’s through paying the interest only on a home equity loan or relying on assistance from partnerships with family and friends, first-time buyers are demonstrating a resourceful attitude toward making property ownership in Toronto a reality.
Improving Credit Scores
A year and a half ago, the introduction of a new stress test by Canada’s bank regulator made it harder for less affluent home buyers to qualify for a mortgage. This means it’s even more important for potential purchasers to economise, cut credit card usage and reduce debt. These actions could then lead to an improved credit rating. In any case, by checking their rating, buyers can learn how their credit score is determined, and look for any errors that may be causing it to be lower than necessary. Even with a poor credit rating, it is still possible to secure a home loan, although interest rates may be higher.
Splitting the Costs
Buyers with a realistic view of how much they have to spend are looking at creative ways to fund their first home. In Toronto, nearly half of 20 to 34 year olds live with a parent after finishing their education which helps many of them save money for a downpayment. Faced with increasing property prices, co-purchasing with friends or relatives is another alternative route to securing home ownership. By splitting buying costs and the monthly mortgage repayments, young professionals are able to get a foot on the property ladder.
Finding Affordable Housing
The City of Toronto could potentially confront the problem of housing affordability with a powerful planning tool, known as Inclusionary Zoning. In the future, new developments could be required to allocate a certain number of their units to affordable housing. For now, the City of Toronto works with several housing organisations who can provide help for buyers wanting to purchase a more affordable home through minimising sales costs, deposits and maintenance fees.
Despite rising real estate prices in Toronto, property sales remain buoyant as new and young buyers find inventive ways to purchase a home.