Winning the lottery had always been a fond dream for Mikal Jones and his mom.
They’ve always rented, and they want to buy their first home. They would often see new residential construction going on in Vancouver during their walks together near the basement suite where they live.
“Whenever we’d look at these developments, we’d always talk: ‘Oh, wouldn’t it be nice to, one day, like if we won the lottery, to buy this or, you know, have a place over there?’ ” Jones related with a chuckle in a phone interview with the Georgia Straight.
It’s different now, according to the 19-year-old.
“Eventually, it went from, you know, ‘if we win the lottery’ to ‘buying it’ to ‘You know what? Maybe we should just try our best to kind of muster up a down payment,’ ” Jones said.
They’ve been working on it, and Jones said that it will take them a few years. “Ideally, a townhouse, but realistically, probably a condo because it would be more affordable,” he said about what they’re looking to buy. “Yeah, probably just a two-bedroom condo around East Burnaby, East Vancouver, somewhere like that. Just something affordable, just to get our foot in the door.”
Their strategy is simple: work and save. “I work a lot of jobs,” said Jones, who does shifts in a fast-food chain and cleanups at construction sites.
He is also taking business administration at Langara College. He will earn his degree in the next two years and likely get a better-paying job. He dabbles in stocks as well.
His mother, Tonette Mira, does babysitting and cleaning jobs. “She’s always working very hard,” Jones said.
Originally from the Philippines, Mira is a long-time member of the Committee for Domestic Workers’ and Caregivers’ Rights (CDWCR), a Vancouver-based nonprofit.
Jones credits the financial-literacy workshops being delivered at CDWCR by Lorina Serafico for putting him and his mom on a path to homeownership.
“Tita [Tagalog for ‘aunt’] Lorina helped us. She kind of…put it into perspective where we were able to think, ‘Okay, maybe this is possible. Maybe we don’t need a hundred million dollars to buy a house by the river or something,’ ” he said, laughing.
Serafico is a CDWCR leader currently working as a home-financing adviser with Scotiabank. She has been conducting her basic finance workshops with the group and its supporters since 2007.
A December 2016 report by industry association Mortgage Professionals Canada (MPC) noted how high home prices have made it challenging to scrape together a down payment.
“For new homebuyers, monthly mortgage costs have been relatively stable compared to incomes, as interest rates have fallen. But, the rapid rise in house prices means that required down payments have increased relative to incomes,” according to the document Annual State of the Residential Mortgage Market in Canada.
The MPC report stated that a 20-percent down payment for an average house is equivalent to 102 weeks of the average wage in Canada. Today’s initial payment is double that 15 years ago.
“This is not to say that it takes 102 weeks to save a down payment—the actual period depends on individual circumstances, including what percentage of income can be saved,” the report explained. “Actual periods for saving down payments will generally be considerably longer, which causes most first-time buyers to resort to other sources of funds in addition to their savings.”
Since the report’s release, prices of condos in East Vancouver have increased by 16.7 percent.
A typical apartment in that part of the city, where Jones and his mom would like to buy, was going at $507,700 as of June this year, based on figures by the Real Estate Board of Greater Vancouver. At current prices, they would have to raise at least $25,000 for the minimum required down payment of five percent for a home purchase.
Jones was interviewed on July 13, a day after the Bank of Canada raised its key interest rates for the first time in seven years. This means that mortgages are going to increase, and it may just be the beginning. The central bank is anticipating it will hike interest rates again toward the end of this year.
Jones said he knew about the interest-rate increase and that this will make it more expensive for people to buy a home.
He’s not too concerned. He and his mom are sticking to their plan to keep on saving.
As Jones said: “When we’re ready, we’ll do it.”More