Young, single and ready to… get a mortgage? According to TD Canada Trust research, nearly 43 percent of first-time homebuyers in Canada are doing it on their own. What's more, census data released by Statistics Canada in September shows that there are now more people living alone in Canada than ever before. One-person households now make up 27.6 percent of the market; that's a threefold increase since 1961 and a 10.4 percent increase since 2006.
While more and more Canadians are climbing the property ladder solo, it's not an easy task to manage. As empowering as it is to tackle the task of purchasing a home on your own, this isn't an investment that you should enter into lightly. You can always return a retail overindulgence if you feel buyer's remorse. It's a little harder to back your way out of a mortgage if you find you've bitten off more than you can chew.
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Who's ready to buy?
Low mortgage rates continue to make it easier for young individuals to start investing in property on their own. But 20- and 30-somethings aren't the only ones taking the leap alone. Affordable rates have also made it easier for recently separated or divorced individuals to enter the market.
Men are more likely to purchase a home on their own. According to research by TD Canada Trust, more than half of men buy their first home solo (55 percent). That's not to say that women don't play a prominent role; nearly one-third of women buy their first home sans-partner.
Sizing up the options
TD's research confirms that condos are currently the property of choice for single home hunters. Canadians that decide to enter the housing market on their own are more likely to invest in a high-rise condo than those buying with a co-purchaser (24 percent versus 14 percent). Not surprisingly, individuals with a co-purchaser are more likely to opt for a fully-detached property (62 percent versus 44 percent).
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Condo developers have been tracking and taking advantage of this shift for nearly a decade. The trend towards lone-person households has enabled developers to downsize their blueprints and shrink the average size of urban dwelling spaces.
This urban shrinkage is most apparent in Toronto. Canada's most populated city is currently in the process of building more high-rises than anywhere else in North America. It's estimated that 53,000 new condo units will be completed in the city's centre in the next 18 months alone. Of the 6,005 condos ready for occupancy this year in the city's core, 63 percent were either studio or one-bedroom-plus-den options. The average size of these units was 822 square feet.
Think that's small? Of the 9,090 condos slated for completion in 2014, 67 percent are studios or one-bedroom-plus-den units. The average size of these units has shrunk to 695 square feet. Studios can often be as small as 300 square feet.
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Welcome to what real estate mogul Brad Lamb refers to as the "Manhattanization" of Toronto.
Indeed, the demand for larger condos in Toronto is currently very low. As such, developers are catering their buildings to what is selling — small units for singles and urban dwelling couples.
Why a condo makes sense for singles
Your priorities as a solo house hunter likely differ from those of a couple, so make sure that you take the time to really assess your lifestyle and living requirements before taking the plunge. Condos require a lot less maintenance than single-family homes, plus they offer additional security. Of course, there's always the added expense of extra amenity charges. Things that you take for granted in a detached-dwelling (parking, grass) will cost you extra when you buy a slice of the condo life.
Don't buy just because everyone else is
Feeling left out because all of your friends are entering the world of real estate? You shouldn't. When deciding whether it's time to buy or keep renting, make sure you consider how "rooted" you are. If you have a stable job and plan to stay in the same place for the foreseeable future, buying could be a good investment. If you're not willing to commit to at least five more years in your current city, it's best to continue renting.
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When it comes to financial considerations, remember that owning a home costs roughly $500 more per month (with insurance, property taxes, etc.) so don't forget to include that cushion of cash into your monthly expenses. Ideally, your housing costs shouldn't equate to more than 30 percent of your monthly income.
And don't be surprised if lenders treat you a little harsher than your friends who are coupled up. You only have one credit report and one income — they have two. As such, expect to qualify for less house.
Taking that first step
Entering the real estate market on your own can be both a terrifying and rewarding experience. If you're having second thoughts, consider talking with a mortgage or real estate professional prior to submitting an offer. A little guidance is often your first step towards owning your own piece of the real estate pie.
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Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.
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