Real Estate options for First-Time Homebuyers in the GTA


As interest rates continue to stay at historical lows and immigration in the GTA remains strong[1], real estate will continue to boom. The way that I see the real estate market now and in the future, first-time homebuyers in the GTA have four options to own real estate and stay in the GTA. These options are as follows:

  • Buy a Condo

  • Pros

  • Typically in desirable location with a good walk score

  • Continue to live the GTA lifestyle

  • Maintenance free

  • Onsite amenities

  • Cons

  • Average price north of $600k for the average condo

  • Few units available in the $400k-$450k price range

  • Will likely be a touch smaller than current rental accommodations

  • Buy a Bungalow

  • Pros

  • Could potentially finish the basement to be a basement apartment and rent out for additional income. If basement apartment is already in place 50% of rental income can be captured to help with a mortgage approval – seek mortgage brokers advice[2]

  • Vacancy rates are hovering around 1% in Toronto – It’s a Landlord’s dream!

  • Own land

  • More flexibility to renovate to fit your needs and add on to the house in the future

  • Cons

  • Average price hovering around 800k for bungalow in Mimico/New Toronto/Long Branch – Similar in other gentrifying neighbourhoods

  • Many built in the 1930’s and in need of work

  • Walk score will likely be lower (but still OK) - some lifestyle changes will need to be made

  • Continue to rent, invest out of town and hire a Property Manager

  • Pros

  • Lower entry price point in markets such as Cambridge, Guelph, Hamilton, Ajax, Whitby and Oshawa. In these markets you can find a semi-detached and sometimes detached houses for $400-$500k

  • None of these markets have high vacancy rates and rent rates continue to climb

  • Still building equity but maintaining desired lifestyle in the GTA

  • Cons

  • Sometimes Property Managers aren’t exactly perfect

  • Unexpected expenses

  • Potential tenant issues

  • Co-ownership agreement with friends to get into the market

  • Pros

  • Greater downpayment and buying power

  • Equity building

  • Familiarity with co-owner

  • Cons

  • Each party could have a lifestyle change that may make the co-ownership agreement less appealing to one or both parties[3]

  • Managing household responsibilities, repairs and maintenance

  • Agreeing on renovations and renovation design

All of these could be options to get into the real estate market, contact me today to discuss these options further. I have experience working with first-time home buyers, investing in single-family and multi-family property, renovations and partnership agreements. I would love to help you take the plunge in to home ownership.

Sincerely,

Derek D. Wacker

[1] https://www.cbc.ca/news/canada/toronto/toronto-immigration-1.4383867

[2] https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/mortgage-loan-insurance-homeownership-programs/rental-income

[3] https://www.advisor.ca/tax/estate-planning/what-to-do-when-friends-want-to-buy-property-together/