The definition of a first-time home buyer is self-explanatory. The definition of a starter home in Calgary – well, that has changed in the last 30 years.
A starter home is that first toe into the marketplace – a home with the good, affordable price and excellent value for somebody or some family to enjoy when they are just getting into home ownership.
In the 1950s, starter homes had one or two-bedrooms. A starter home was detached and was either a very old home or perhaps a brand new tract home in one of Calgary’s new suburban neighbourhoods and most new home buyers were in their early 20s. The average home price was $22,000 when an average income was just under $5,000 a year. As you can see, prices these days are not quite in sync.
Fast forward to 2006 when entry level single-family homes were priced in the low $200,000s. Today, those prices are still available for new buyers who are willing to purchase an apartment condo or a townhome. But detached product is now $320,000 to $350,000 depending on what area of the city the buyer is looking at. With those entry level pricing, buyers are looking at more for their money.
With raised expectations, first-time buyers should take a serious look at what sort of compromise they can make in terms of immediate lifestyle and perhaps look at a starter home as a vehicle to build equity rather than a together-for-life type of philosophy. Some of the items on the “want list” may have to be forsaken in light of cost considerations.
Apart from adjusting expectations, new home buyers entering the marketplace for the first time have more choice than what has been available historically. New and resale townhomes, condos and for the first time, laned homes.
You can actually purchase a three-bedroom townhome with an attached garage for $249,000 in a new community in North East Calgary. There are townhomes with two master bedroom suites which enables first-time home buyers to pool resources and share a mortgage with room mates. It’s a way of getting the proverbial foot in the door.
When once young nuclear families were purchasing homes, today there are more single adults who are tired of renting and are purchasing. Demographics are also changing, going from 20-somethings in a bygone era to buyers in their 30s. Industry watchdogs say this is because of money. As illustrated, salaries are not commensurate with home prices. In fact, the statistics on the number of young people looking to their parents to assist financially with purchasing a home for the first time is rising, and quickly.
The real estate industry and home building associations should continue to look at this new generation of home buyers, the Millennials, to see what further initiatives will help get these young people into a home of their own.
As prices continue their slow descent in Calgary, the affordable aspect of starter-homes may just take care of itself. In the meantime, first-time home buyers need to adjust expectations, continue hunting for good value and adhere to the three tenants of purchasing re-sale property: location, location, location.