We’ve all been hearing for some time how first-time buyers can’t get into the housing market because homes – especially in the GTA – simply aren’t affordable. How can you climb the property ladder if you can’t even reach the first rung?
It is possible, as our own story shows, and we’ve started from scratch twice. The key is in determining your priorities.
Is owning important to you?
When we were still teenagers, a friend’s Mom sat us down and carefully pointed out the value in owning versus renting. It was advice that had an impact on us and it’s why we saved hard to be able to buy shortly after we were married. We were among the first of our friends to do so.
What’s your priority?
But buying that first home came with some tough choices. We wanted to stay in our Scarborough Bluffs neighbourhood, yet there was no way we could afford the type of home we wanted – a detached, three-bedroom home near the lake – in that area.
So, we had to choose what was more important – location or home size – then headed east, all the way to Ajax, in order to afford the type of home we wanted with our $160,000 budget. Keep in mind that this was back in 1991, and that home today would be worth about $600,000. At the time, we were willing to make the commute to work in order to have a roomy home, on an even roomier lot, just yards from the water.
And we did have help. The bank of Mom and Dad both loaned us money to help with our down payment (which we paid back) and Matt’s Mom rented an apartment we created in the basement to help us offset mortgage payments.
What if your priorities shift?
But it wasn’t long before we grew tired of the commute and yearned for more of a lifestyle near our friends in the city. No longer was the type of home the most important thing, it was the location. So, we sold our house and bought a smaller two-bedroom condo townhome in The Beach. In the four years we had owned our Ajax home, we had built some equity, which helped fund our lifestyle switch.
We owned our condo town in The Beach for 10 years, but then our priorities shifted again. Ready for a year-long sabbatical, we left our jobs, sold our home and sailed our boat down to the Bahamas for 13 months. It was a much-needed change.
How do you start over?
Of course, when we came back in 2006, we had to find a way into the market all over again. Our sabbatical had depleted much of our funds and while Madalin was able to return to her job, Matt was hungry for a change and set about getting his real estate licence.
It was important enough to us to become homeowners again that we decided to suck it up and scraped together enough money to buy a one-bedroom condo in the Beach. A roomy three-bedroom detached home this was not, but it was a compromise we were willing to make to start climbing that property ladder again.
We stayed in that apartment for two years and as Matt’s real estate career grew and we built more equity, we saved again until we were able to buy a second property in 2009. This was a two-bedroom condo townhome that we were able to grow into.
But we really wanted that three-bedroom home and we wanted it in The Beach. Continuing to buckle down and save, by 2015 we found the home we wanted and could afford. It meant selling the townhome, but through it all we were able to hang onto that one-bedroom condo as a rental property.
Can everyone do this?
Is our situation unique? Of course not.
Granted, not everyone can turn to the bank of Mom and Dad, and neither did we the second time around. But we were willing to practice delayed gratification to sock away as much as we could for a down payment. And we were willing to compromise on home size in order to take that first step on the ladder, knowing we’d eventually climb higher to afford the type of home we really wanted.
So, if home ownership is your goal, do whatever it takes to get to that first rung. Once you’re on the ladder, it becomes much easier to climb it. If that means you drive out of the city until you can afford to buy, or you buy a tiny condo so you can stay in the city core, choose the priority that’s most important to you and start climbing.