Advice to My Younger Self about Home Ownership

My greatest regret about home ownership is that I didn’t start sooner. I bought my first apartment when I was 26, and if I had been nudged by property-savvy family or friends, I probably could have started in my earlier 20s. One of my motivations for purchasing was that I had just started a career in real estate, and I thought it would look hypocritical if I was selling clients condos in Yaletown and I didn’t own something myself, or know what my clients were going through. I still am wary of Realtors® who can advise clients to buy or sell real estate without being personally invested in the market. 

Lately, all I hear about in the news is how hard it is to purchase a home in Vancouver, and how most people in their 20s will not be able to own a property until they get an inheritance (or a down payment gifted from mom and dad, which is happening more often). I will admit, it’s not always easy for people to get into home ownership. And I firmly believe that not everyone is cut out for home ownership. Those in minimum wage jobs, those who plan to move around a lot for work (or who are afflicted with wanderlust), and those who are spenders instead of savers may find ownership too onerous. But for those who want a home of their own, and are dedicated to it, I still very much believe that homeownership is an attainable goal, that will build wealth over time. If you’re reading this and you’re in your late teens or 20s, this would be my advice to you:

SAVE YOUR MONEY. As someone once said, “if it’s on your ass, it’s not an asset”. The first thing you need to do is stop spending all of the money you earn. My first home was purchased with a loan to myself (through my RRSP, which I had been squirrelling away through my early 20s) in the amount of $17,500 to purchase a condo for $252,000. I took advantage of the CRA’s Home Buyer’s Plan, which allows you to withdraw up to $25,000 from your RRSP account to use as a down payment towards the purchase of a home they plan to live in as a principle residence. Find out if you’re eligible here: http://www.cra-arc.gc.ca/hbp/ More recently, the Province is now helping home owners by giving them interest-free and payment-free loans through the BC Home Owner Mortgage and Equity Partnership Program, https://housingaction.gov.bc.ca/tile/home-owner-mortgage-and-equity-partnership/, although I recommend to my clients that they be wary of the program.

TALK TO YOUR BANK. The first step to home ownership is speaking with your bank or mortgage broker about your ability to qualify for a mortgage. With that information, you will be better equipped to know what you can afford, and where—and even IF. Once you have qualified for a mortgage, it’s time to get started looking for a home. 

TALK TO YOUR REALTOR®. If you think that you are looking for a home by perusing homes on websites like Realtor.ca or REW.ca, and just hitting an open house or two every week, you are not doing it right. After getting pre-approved, get out in the car and take a tour of 5 or 6 homes at once with a good Real Estate professional that can walk you through the process of finding and securing your home! This is more time effective, and far more likely to result in a positive purchasing experience. 

ADJUST YOUR EXPECTATIONS. Vancouver is expensive, no doubt about it. When I purchased, I “splurged” on a small one bedroom and den suite with gross carpeting. I thought it was very expensive, but I saw the value in NOT paying a landlord every month. Did I want a 2 bedroom suite? Of course. But baby steps. Just get your foot into the market. My parents thought I was crazy. The place was a shoe-box, but it had a great view, and was walking distance to everything. I owned it for two years, and then sold it for a profit to purchase a suite 200 square feet larger. My biggest regret is that I didn’t keep it!

PLAN TO LIVE NEAR TRANSIT AND YOUR WORK. Commuting sucks. And over the course of your life, it’s an extra year or two spent sitting in a car. Did you know that research shows that driving to and from your home in the suburbs can cost the same as a mortgage, when you spread those car costs over 25 years (like a mortgage?). Read about it here: https://thetyee.ca/News/2016/12/21/Million-Dollar-Commute/ My advice would be to live close to where you work, and reconsider car ownership in favor of car co-ops and transit.