Policy-makers in Ottawa may be diving deep to help slow down sizzling housing markets that are pricing millennials out of certain housing markets, but some developers are coming up with other ways to ensure that first-time buyers are able to get a piece of the real estate pie.
Developer Concord Pacific launched an exclusive pilot program called Home Ownership Made Easy (HOME) for 50 first-time home buyers at their Burnaby complex in Vancouver. Program incentives include a “helper gift” after closing that will approximately pay half of a typical mortgage payment for 1 year, and a discount on the first and last deposit. The response to the program was so encouraging in Vancouver that Concord announced the launch of the same program in Toronto, setting aside 20 condominiums in their LakeFront and LakeShore developments.
“I think it’s a great idea,” said Dara Fahy, senior mortgage planner with City Wide mortgage services. He says that he currently has a few clients who are in a situation where they have been approved to purchase a condominium, but they don’t have the 10-15% deposit that developers are asking for in addition to their down payment. He cautions, however, that the helper gift “could potentially be an issue with lenders.” If it comes as a lump sum payment, then it may have to be deducted from the purchase price and only 90% of the net price after that rebate would be financed, depending on how it’s worded in the contract.
Still, Fahy argues, it could be a win-win situation. “At the end of the day, they’re paying less for the property at the bottom line.” For those first-time buyers who take advantage of the program, he also suggests “using that incentive and keeping their mortgage payments the same, and using that as an extra payment to pay the mortgage off faster.”
Grant Murray, senior vice president of sales at Concord Pacific, says that they were surprised at the response to the program but said that they think it’s a great way to give millennials a hand up.
“There’s a lot of talk about the young crowd, who are 19-35 in Vancouver. We wanted to do something for this age group that really stood out to give them an advantage to try and be
As opposed to changing the regulations and lending requirements across the country, this pilot program is one that is done on a small scale and has the potential to help those who are at the very bottom of the property ladder.
In order to qualify, buyers have to be a Canadian Citizen or Permanent Resident; have lived in the province for the past 24 months; have never before owned an interest in a residential property anywhere in the world; be between the age of 19 and 35; and purchase a unit for $500,000 or less.
“Concord being as big as they are, I’m sure is a bit of an innovator and a leader, so I certainly hope that others follow suit,” Fahy says. But is this program and the expansion of others like it enough to ensure that millennials in Vancouver and Toronto get a piece of the real estate pie?
“I don’t know, but it helps for sure.”
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