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Eager to enter the market
'Young people don't seem to mind buying from plans'
KATHY FLAXMAN
From Friday's Globe and Mail
June 6, 2008 at 12:00 AM EDT
Brian Hodgson is a young man who has his life mapped out and is wasting no time following the plan.
At 25, with a degree in psychology from St. Mary's University in Halifax, he's working in marketing at the Bank of Nova Scotia in Toronto.
Backed by three seasons of summer work in different departments, he's now helping financial planners with their marketing strategies, which he finds fascinating.
"The bank I work for has a large international presence," he says. "I like the idea of being part of a team like that. However, I also like the idea of striking out on my own one day."
The long-term view
Along with learning about the world of business, he's focused on another part of his life plan: owning property. By the end of 2009, if all goes well, he will be the owner of a one-bedroom condo with den in the downtown core.
"I didn't like the idea of renting," explains Mr. Hodgson, who currently lives with his parents in North Toronto.
"I really wanted to invest in my own future. When I finished university and came back to Toronto, it was time for me to move on to the next stage in my life.
"I'm working on paying off the down payment now, and if the building's closing were delayed, that could even be a blessing."
A property owner at 26, with a big mortgage to pay and the responsibilities of home ownership? Utility bills, property taxes, repair bills? Is being in your mid-twenties too young to be encumbered by major domestic responsibilities?
Mr. Hodgson clearly doesn't think so.
"I now live near Yonge and Lawrence and I hate the morning commute, about an hour, to work at Yonge and King streets. I will be able to walk to work," he says of his home-to-be in the Vu development by Aspen Ridge Homes.
Units in the building at Jarvis and Sherbourne streets range from $160,000 for 530 square feet to $710,000 for 1,500 square feet. "I looked at a number of downtown buildings and this appealed to me," he says. "I face south and west, and I am steps from the St. Lawrence market. I love to cook and entertain so this should be great."Mr. Hodgson is living rent-free at his family home while he puts money aside for his new condo. He also has some savings, and made some successful stock market investments that are going toward the purchase.
Over all, he is a canny consumer, paying his credit card bills in full and accumulating loyalty points for trips and other entertainment.
"I don't buy anything," he says, "unless I have the money to pay for it."
Along with sound financial planning, Mr. Hodgson says legal information was crucial. "I had a lawyer who, for just over $150, went over all the legal documents with me and highlighted everything I needed to be particularly aware of. ... It was worth it."
Agent Karen Davis of Sutton Group Bayview Realty Inc. meets a lot of young adults — "25 or 26, though, is younger than average" — who want to buy property, and says condos are a popular first-time choice.
"Things like taking out a loan for the down payment and the 40-year amortization mortgage make it easier for people to get into property. And young people don't seem to mind buying from plans," she says.
Experts say that young adults need to fully understand the financial aspects of buying, even before they begin looking. "Their agent should make sure they understand all the costs that will be involved. … There are things to know, such as that condo fees may be low for a few years and then rise if the cost of running the building makes that necessary," Ms. Davis says.
"It is very important for people of any age to get pre-approved by their bank for a mortgage," she stresses.
Many young buyers turn to their parents for financial help when it comes to a first home, either for the down payment, or to cosign for the mortgage.
"It isn't that there is discrimination against young people," Ms. Davis says. "Not at all. A mortgage company looks at your income and your credit history and bases its decision on that. Parents often are helping with the down payment and they may be asked to be on the title of the property by the lending institution."
Dorothy Wong of ReMax Goldenway Realty agrees that most people in their mid-twenties do not earn enough to carry a mortgage on their own. "They are probably in their first job earning about $40,000 a year. The banks want to see income of $60,000 to $70,000 for two years for a purchase in the $300,000 range," Ms. Wong says.
"Most people start to buy in their early 30s, and, in my experience, the majority are women looking at condominiums," she adds.
If the property of choice for young buyers is condos, it's at least partly because the developers make it easy. They may have mortgage specialists on site, and offer loans to facilitate the down payment.
Often there is a gap of several years between signing on the dotted line and completion of a condo, giving buyers time to pay off the loan for the down payment before beginning mortgage payments.
One young woman, who spoke on condition of anonymity, says this is how she and her fiancé are purchasing a two-bedroom condo at Yonge and Sheppard. It will eventually cost them about $1,400 a month to live in a building that's close to the subway and has green features as well as a gym and pool.
"The mortgage approval process went very smoothly," she says, adding: "This doesn't feel as bad as renting and although it's a bit of a long way off ... it is very exciting."
Until it's time to move in to her condo, the young woman, like Mr. Hodgson, is living at her parents' home to save money toward the purchase. But many people in their early twenties aren't interested in living with their parents, or in becoming homeowners."I've been on my own, paying my own rent and other bills for six years now," says Jenn Mason, 24, co-ordinator of international and retail special events for MAC Cosmetics.
"I wanted to be independent as soon as possible. I'm good with money but I haven't saved enough for a home yet. A lot of us are still looking at loans from school, too ... I think a lot of people my age who buy property have help from their parents."
Ms. Mason currently rents a downtown studio decorated with wrought iron and glass, an entire wall of photos by a talented friend and a stunning gold accent wall. Rent and utilities cost about $800 a month.
She wonders if people her age who are determined to buy a place are fully prepared for the realities of running their own home. "If you are living at home, and your first place on your own has a big mortgage and you suddenly have to cope with that, with loan payments and taxes, will you be able to cope with such a huge change in responsibility? Managing money and paying bills is stressful."
'Young people don't seem to mind buying from plans'
KATHY FLAXMAN
From Friday's Globe and Mail
June 6, 2008 at 12:00 AM EDT
Brian Hodgson is a young man who has his life mapped out and is wasting no time following the plan.
At 25, with a degree in psychology from St. Mary's University in Halifax, he's working in marketing at the Bank of Nova Scotia in Toronto.
Backed by three seasons of summer work in different departments, he's now helping financial planners with their marketing strategies, which he finds fascinating.
"The bank I work for has a large international presence," he says. "I like the idea of being part of a team like that. However, I also like the idea of striking out on my own one day."
The long-term view
Along with learning about the world of business, he's focused on another part of his life plan: owning property. By the end of 2009, if all goes well, he will be the owner of a one-bedroom condo with den in the downtown core.
"I didn't like the idea of renting," explains Mr. Hodgson, who currently lives with his parents in North Toronto.
"I really wanted to invest in my own future. When I finished university and came back to Toronto, it was time for me to move on to the next stage in my life.
"I'm working on paying off the down payment now, and if the building's closing were delayed, that could even be a blessing."
A property owner at 26, with a big mortgage to pay and the responsibilities of home ownership? Utility bills, property taxes, repair bills? Is being in your mid-twenties too young to be encumbered by major domestic responsibilities?
Mr. Hodgson clearly doesn't think so.
"I now live near Yonge and Lawrence and I hate the morning commute, about an hour, to work at Yonge and King streets. I will be able to walk to work," he says of his home-to-be in the Vu development by Aspen Ridge Homes.
Units in the building at Jarvis and Sherbourne streets range from $160,000 for 530 square feet to $710,000 for 1,500 square feet. "I looked at a number of downtown buildings and this appealed to me," he says. "I face south and west, and I am steps from the St. Lawrence market. I love to cook and entertain so this should be great."Mr. Hodgson is living rent-free at his family home while he puts money aside for his new condo. He also has some savings, and made some successful stock market investments that are going toward the purchase.
Over all, he is a canny consumer, paying his credit card bills in full and accumulating loyalty points for trips and other entertainment.
"I don't buy anything," he says, "unless I have the money to pay for it."
Along with sound financial planning, Mr. Hodgson says legal information was crucial. "I had a lawyer who, for just over $150, went over all the legal documents with me and highlighted everything I needed to be particularly aware of. ... It was worth it."
Agent Karen Davis of Sutton Group Bayview Realty Inc. meets a lot of young adults — "25 or 26, though, is younger than average" — who want to buy property, and says condos are a popular first-time choice.
"Things like taking out a loan for the down payment and the 40-year amortization mortgage make it easier for people to get into property. And young people don't seem to mind buying from plans," she says.
Experts say that young adults need to fully understand the financial aspects of buying, even before they begin looking. "Their agent should make sure they understand all the costs that will be involved. … There are things to know, such as that condo fees may be low for a few years and then rise if the cost of running the building makes that necessary," Ms. Davis says.
"It is very important for people of any age to get pre-approved by their bank for a mortgage," she stresses.
Many young buyers turn to their parents for financial help when it comes to a first home, either for the down payment, or to cosign for the mortgage.
"It isn't that there is discrimination against young people," Ms. Davis says. "Not at all. A mortgage company looks at your income and your credit history and bases its decision on that. Parents often are helping with the down payment and they may be asked to be on the title of the property by the lending institution."
Dorothy Wong of ReMax Goldenway Realty agrees that most people in their mid-twenties do not earn enough to carry a mortgage on their own. "They are probably in their first job earning about $40,000 a year. The banks want to see income of $60,000 to $70,000 for two years for a purchase in the $300,000 range," Ms. Wong says.
"Most people start to buy in their early 30s, and, in my experience, the majority are women looking at condominiums," she adds.
If the property of choice for young buyers is condos, it's at least partly because the developers make it easy. They may have mortgage specialists on site, and offer loans to facilitate the down payment.
Often there is a gap of several years between signing on the dotted line and completion of a condo, giving buyers time to pay off the loan for the down payment before beginning mortgage payments.
One young woman, who spoke on condition of anonymity, says this is how she and her fiancé are purchasing a two-bedroom condo at Yonge and Sheppard. It will eventually cost them about $1,400 a month to live in a building that's close to the subway and has green features as well as a gym and pool.
"The mortgage approval process went very smoothly," she says, adding: "This doesn't feel as bad as renting and although it's a bit of a long way off ... it is very exciting."
Until it's time to move in to her condo, the young woman, like Mr. Hodgson, is living at her parents' home to save money toward the purchase. But many people in their early twenties aren't interested in living with their parents, or in becoming homeowners."I've been on my own, paying my own rent and other bills for six years now," says Jenn Mason, 24, co-ordinator of international and retail special events for MAC Cosmetics.
"I wanted to be independent as soon as possible. I'm good with money but I haven't saved enough for a home yet. A lot of us are still looking at loans from school, too ... I think a lot of people my age who buy property have help from their parents."
Ms. Mason currently rents a downtown studio decorated with wrought iron and glass, an entire wall of photos by a talented friend and a stunning gold accent wall. Rent and utilities cost about $800 a month.
She wonders if people her age who are determined to buy a place are fully prepared for the realities of running their own home. "If you are living at home, and your first place on your own has a big mortgage and you suddenly have to cope with that, with loan payments and taxes, will you be able to cope with such a huge change in responsibility? Managing money and paying bills is stressful."
