Young professionals in Kelowna are skeptical a federal budget announcement will make it easier for millennials to own homes in the Central Okanagan.
With Tuesday’s budget announcement, buyers can rely on the federal government for part of the cost of their mortgages to lower monthly payments.
Canadians can also use more money from their retirement savings plans, from $25,000 to $35,000 to purchase first homes.
But real estate agent and Okanagan Young Professional member Justina Lee Stoltz said it’s difficult to say whether those programs will help first-time homebuyers.
“When they offer programs like this for first-time homebuyers to try and reduce mortgage payments and, in theory, make buying homes easier, it doesn’t address things like pricing,” she said.
“The pricing issue is what’s been driving a lot of people to not being able to afford a home because places like Toronto and Vancouver, and Kelowna to a smaller degree, these places have grown extraordinarily over the past few years, which is how real estate goes.”
“The affordability issue is not that people can’t afford their monthly payments necessarily, it’s they can’t qualify and can’t get into their homes.”
Single-family homes in Kelowna sit around the $700,000 mark. Condos are in the $400,000 range.
Stoltz said it’s not that young professionals can’t afford to make rent payments each month, it’s that the qualifications for mortgages are restrictive along with increasing prices and interest rates that are barring millennials from housing.
As a young professional in the workforce, she would not consider using the program without finding out more information.
Buying a home for young millennials is still a possibility in the Okanagan, and with the natural real estate cycle, there’s more inventory in the market currently as prices peaked in 2017, she said. About 20 per cent of Kelowna’s buying population comes from the Lower Mainland, but that number includes everyone, not just millennials.
Brian Stephenson, a real estate lawyer and OYP member on the advisory board, said during his purchase of a townhouse in 2017, he used the provincial Home Owner Mortgage and Equity Partnership program, which is now gone. He thinks the recent federal announcement is reminiscent of that program.
“Essentially what the government’s doing is we have this mortgage stress test on one side of the spectrum, meaning it’s reducing the buying power of individuals, and there’s arguably good reason to do that… but this announcement is going to be a stimulus for the market and they are at cross purposes there,” he said.
“The point would be why don’t you play with the stress test a little bit instead of making a whole other grant-type system,” Stephenson said.
He’s happy to see the increased limit for people to be able to pull from RRSP’s but most of his clients struggle getting an initial down payment.
“Everything’s getting more expensive for people.”