With half a million dollars in mind, a couple in their early thirties thought they had enough leeway to acquire their first home in a suburban municipality on the South Shore of Montreal. They quickly became disillusioned.
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“The prices have really gone up a lot. And with the interest rates which have also risen, it has become even more complicated, ”says Stéphanie Dion, a young professional in the marketing industry, who became a mother seven months ago.
With her spouse, Nicolas Marlin, she hoped to find a house in Saint-Bruno-de-Montarville, in Montérégie, where the mother spent most of her life. “I saw myself continuing our life there, like several friends elsewhere.”
A marathon of disappointments
But it was a disappointment, as soon as the marathon of visits started in January. “For $500,000, everything we visited was run down, houses built in the 1960s or 1970s, often in dire need of work. It was disheartening.”
For the young couple, then, a difficult process of reducing expectations is imposed. And, with him, as the visits progressed, a revision – constantly upwards – of the budget limit he had set himself in order to respect his ability to pay.
This is how its initial budget jumped to $550,000, then to $600,000, before reaching $650,000… Decisions that were made all the more difficult by the successive increases in the Bank of Canada’s key rate for a year make every dollar borrowed harder to bear.
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The crush
“It’s very difficult for the youngest, who can’t enjoy the proceeds of the sale of their previous house,” admits Johanna Leung, real estate broker for the Profusion Immobilier agency in Montreal.
For these types of buyers, she generally recommends that they try to qualify for a mortgage of short duration – two years for example – with variable rates. “It allows them to set foot in the market, while limiting the damage. They will then be able to adjust, in the event of a decrease in rates as we anticipate.
Finally, a cottage with garage and veranda, built in 2009 in Chambly – about twenty kilometers southwest of Saint-Bruno – ended up attracting the attention of young parents. After negotiation, they agree to pay: $663,000, or 30% more than the initially desired budget.
Expensive paid
“We take possession in June. We are happy, says the future owner, even if I cannot help thinking that it is still expensive to pay for what it is”. Especially, she explains, when she thinks about the homes that others could afford for sometimes half the price, less than five years ago.
“Basically, she continues, we would probably never have been able to afford a house, if it had not been for the decision of our parents to let us benefit from their inheritance before the time. We are lucky to have been able to get help from them in this way.”
“It’s frustrating, because it’s not true that salaries have doubled during this period. Without them, even though we have very good salaries, we would have been forced to wait for interest rates to come down. Because a 1% drop in the interest rate on such a sum can make all the difference.
–With the collaboration of Francis Halin
- The median sale price of a single-family residence in Quebec was $250,000 in February 2018. Five years later, in February 2023, the median price of the same single-family residence was $401,000, a increase of 60.4%.
- The median sale price of a single-family residence in Greater Montreal was $310,000 in February 2018. Five years later, in February 2023, the median price of the same single-family residence in Greater Montreal was to $515,000, an increase of 66.13%.