After years of the housing market being insane, is it ever going to be possible for our generation to own a home?

In the past five years, the housing market in Ontario has been a rollercoaster. With interest rates jumping and falling, buying or selling a house since 2021 has been a challenging endeavor and leaves many first-time buyers wondering, ‘will we ever be able to afford anything in this market?’ 

Who knows?  

“The pain has been felt,” said Jason Lesky, sales representative at Pay It Forward realty in Brantford. 

Prime rates are the rates financial institutions use to determine the interest rate on loans, mortgages and credit cards. Prime rates have jumped incredibly since 2021. In January of 2021 the prime rate was 2.65 per cent, a very low rate which made buying and selling quite lucrative, before jumping all the way up to 7.79 per cent in October 2023. This huge increase in a relatively small amount of time destroyed the market and people’s spirits.  

“I’m seeing a lot more people in situations where they have to sell because they just can’t afford it [their house].  They bought, they didn’t lock in [on a rate] and all of a sudden, their payments are doubled, and they can’t afford their lifestyle and dip into their life savings,” said Lesky. 

Since the increase in rates, the Bank of Canada (BOC) maintained a steady rate from mid-2023 to June 2024. In December, the rate was sitting at 3.25 per cent.  

Now as 2025 begins, Lesky is heading into this year’s market with cautious optimism, “the current state, I think it’s unknown. I think there’s a feeling of the calm before the storm,” he says. 

Experts in the field are also projecting a rate decrease, according to an article written by Vikram Barhat for Morningstar titled, How Much Will the Bank of Canada cut rates in 2025? A strategist from Desjardin Insurance named Tiago Figueiredo predicts by the end of 2025 the central bank will lower the policy rate to 2.25 per cent. 

It is fair to say that hope in the housing market has been bleak the past few years and young adults have all but written off the prospect of buying a house in their lifetimes.  

Alla Sharma, sales representative at REMAX Twin City Realty in Brantford, understands the frustration of being a first time buyer in Ontario, as she was once one herself. When she and her husband came to Canada they had to work hard to get into the housing market themselves, “it’s very hard, sometimes there are major challenges along the way, but I guess it is about taking it one step at a time and doing whatever needs to be done. Taking it day by day or week by week, there will be setbacks but you just keep trying and perservere and think about the bigger picture.” 

 Lesky has advice for first time home buyers to keep in mind as they consider getting into the market and rates look more optimistic.  

Find a trusted local realtor who really knows the area well and will be involved in the whole process along the way, Lesky stresses the importance of asking questions to the realtor often and making sure that everything is clear before moving forward in a sale.  

Having a clear plan is an asset. Being realistic with the budget, expectations and goals for the home will make the process easier. Checking in on that plan often in the procedure is important as well says Lesky because without sticking to the plan people can stray away from their original thought.  

Saving as much money as possible to put the most down on a down payment is a recommendation, depending on the type of home being purchased. If it is a first-time buyer, putting up to 20 per cent is recommended to avoid interest fees on the loan for the mortgage. However, if buying a duplex or rental property putting less down for a downpayment makes more sense because renter income can supplement the mortgage, and some lenders will give more money to a rental property. Lesky says it really is a case-by-case basis, but the best practice is to save as much as possible leading up to purchase. 

Also there are many programs set in place for first time home buyers to ease them into the process and encourage young people to get into the market. Such as first time home buyer’s savings accounts available at most banks for people to start setting aside money for down payments tax free.  As well as a resurgence of the 30 year mortgage length option, lowering payments and helping affordability.  

So, even though many young adults may have shelved their dreams of owning a home in this economy, there may be light at the end of tunnel if the rates stay consistent, and they start saving right away. As Lesky puts it, everything is timing in real estate, so start to prepare and lock in when that time comes.  

This article was originally printed in Volume 24, issue 5 on January 9, 2025.