First-Time Buyers
By Catherine Worthy, REALTOR® · The Worthy Group, Oakwyn Realty Ltd.
Canada’s K-shaped economy is widening the wealth gap. But what if the answer to getting ahead isn’t buying your dream home? What if it’s simply getting started?
There’s a growing financial divide in Canada, and homeownership is playing a significant role.
Economists call it a K-shaped economy. Imagine the letter K. One arm points upward, the other downward. Some households are accumulating wealth through property ownership and investments, while others are struggling to get ahead.
And the numbers are pretty startling.
According to Statistics Canada’s 2023 Survey of Financial Security, families under 35 who owned their principal residence had a median net worth of $457,100.
Families in the same age group who didn’t own their principal residence? Just $44,000.
That’s more than ten times the wealth.
Now, that doesn’t mean buying a house automatically makes you wealthy. Homeowners may have higher incomes, more savings or financial assistance from family. But homeownership has historically been an important way for Canadians to build wealth.
And that brings me to something I think we need to talk about.
Maybe your first home shouldn’t be your dream home.
Somewhere along the way, we’ve developed the expectation that our first home should have three bedrooms, two bathrooms, a garage, a fenced yard and preferably a kitchen worthy of its own Instagram account.
And if we can’t afford that?
We keep renting and waiting.
Waiting for prices to come down. Waiting for interest rates to improve. Waiting until we earn more money.
Or waiting for the Bank of Mom and Dad to open a branch in our neighbourhood.
But here’s the thing. Not everyone has parents who can hand over $50,000 or $100,000 for a down payment.
And I don’t think we should be sending young Canadians the message that homeownership is impossible without that kind of help.
Maybe we need to rethink what a first home is supposed to look like.
Start small. Really small.
What if your first home was a one-bedroom condo?
Not a beautiful new townhouse. Not a detached home with a yard. Not the place you imagine raising three children and a golden retriever.
Just a one-bedroom condo.
Maybe it’s 600 square feet. Maybe the kitchen is dated. Maybe the bathroom is a little tired.
But it’s yours.
And instead of spending another five years saving for a home that keeps getting more expensive, you could be paying down your own mortgage.
Let’s put some numbers to this.
Imagine purchasing a one-bedroom condo for $350,000.
Under Canada’s minimum down payment rules, an eligible buyer could purchase that home with a 5% down payment.
That’s $17,500.
Is $17,500 easy to save? Absolutely not.
But is it potentially achievable with a realistic savings plan, some discipline and perhaps a few lifestyle compromises?
For some people, yes.
Saving $17,500 over four years means putting aside approximately $365 per month, before accounting for any investment earnings. You’ll also need money for closing costs and an emergency fund.
Compare that with trying to save the minimum $40,000 down payment on an $800,000 detached home.
Those are two very different starting points.
And perhaps that’s where we need to change our thinking.
The five-year plan. One rung at a time.
Here’s a strategy I wish more first-time buyers would consider.
Buy what you can comfortably afford today, and make a plan to reassess your housing needs and financial position every five years.
Your first home might be a one-bedroom condo.
Five years later, perhaps you’ve paid down enough of your mortgage, saved some additional money and increased your income enough to purchase a two-bedroom townhouse.
Five or seven years after that, perhaps a small detached home becomes possible.
Eventually, you might find yourself in the home you originally dreamed about.
Not because someone handed you a substantial down payment.
But because you started somewhere.
Now, I am not suggesting everyone should move every five years. Real estate commissions, legal fees, property transfer taxes and changing mortgage rates can make moving expensive. And property values don’t always increase.
Sometimes the smartest move is staying exactly where you are.
The point isn’t to move every five years. It’s to have a five-year financial plan rather than a twenty-year wish list.
Let’s talk about equity.
Suppose you purchase that $350,000 condo with a 5% down payment of $17,500.
With a 4.5% mortgage interest rate, a 25-year amortization and a standard mortgage insurance premium added to your loan, your monthly mortgage payment would be approximately $1,922.
That’s before strata fees, property taxes, insurance and maintenance.
After five years of making your regular mortgage payments, you would have paid down approximately $42,000 of mortgage principal.
Even if the property didn’t increase in value at all, you would have built equity through paying down your mortgage.
Now, let’s assume the property appreciates by an average of 2% annually.
After five years, your $350,000 condo would be worth approximately $386,400.
Your remaining mortgage would be approximately $303,800.
That leaves you with roughly $82,600 in gross equity.
Not $82,600 in profit. You’ve paid interest and other ownership costs along the way, and selling would involve expenses.
But you may now have an asset that can help you take the next step.
That’s the basic principle behind climbing the property ladder.
You don’t have to start at the top.
And you don’t have to rely entirely on rising property prices. Part of your equity comes from steadily reducing what you owe.
What about the Bank of Mom and Dad?
There’s been plenty of discussion about parents helping their adult children purchase homes.
And if parents have the means and want to help, wonderful.
But family assistance shouldn’t be presented as the only path into homeownership.
I worry that we’re inadvertently teaching young Canadians that if their parents aren’t wealthy, they might as well give up.
That’s not a particularly helpful message.
Yes, housing affordability is a serious problem. Yes, purchasing a home is harder for many young Canadians than it was for previous generations. And yes, there are households whose incomes simply cannot support the cost of buying, even at the entry level.
We shouldn’t pretend otherwise.
But there’s also a difference between being unable to afford any home and being unable to afford the home you want.
And I think that’s a distinction worth exploring.
Your first car probably wasn’t your dream car.
Your first job probably wasn’t your dream job.
Your first apartment probably wasn’t particularly glamorous either.
They were starting points.
Why have we decided that our first real estate purchase needs to be our forever home?
There are programs to help you get started.
One advantage first-time buyers have today is access to programs specifically designed to help them enter the market.
In British Columbia, qualifying first-time buyers can receive a full exemption from property transfer tax on eligible homes valued at $500,000 or less.
For eligible properties above $500,000 and up to $835,000, there is an exemption of up to $8,000, with a reduced exemption available on certain purchases below $860,000.
There’s also the federal First Home Savings Account (FHSA), which allows eligible buyers to contribute up to $8,000 annually, subject to contribution room, with a lifetime limit of $40,000.
Contributions are generally tax-deductible, and qualifying withdrawals for a first home are tax-free.
These programs don’t eliminate the challenge of saving a down payment or qualifying for a mortgage.
But they can make a meaningful difference.
The important thing is to investigate your options before deciding that buying is impossible.
Of course, not everyone should buy.
I spent many years in the mortgage industry before becoming a Realtor, and one thing I learned is that just because a lender will give you a mortgage doesn’t mean you should take it.
If you’re carrying expensive debt, your employment is uncertain or purchasing would leave you without any financial breathing room, renting may be the smarter decision.
The same goes for someone who expects to relocate in a year or two.
And when buying a condo, the health of the strata corporation matters enormously. A low purchase price isn’t much of a bargain if you’re facing a substantial special levy.
Renters can also build wealth through disciplined saving and investing.
Homeownership is one financial strategy, not the only one.
But for someone with stable employment, manageable debt and a willingness to start small, I believe it’s worth running the numbers.
The cost of waiting for perfect.
Here’s what concerns me about Canada’s growing wealth divide.
Statistics Canada reports that nearly half of the increase in median net worth among young families between 2019 and 2023 was attributable to growth in real estate equity.
That doesn’t mean everyone who bought a home got rich. And it certainly doesn’t guarantee future price increases.
But it does demonstrate the role housing has played in wealth accumulation.
Meanwhile, many would-be buyers are waiting for the perfect combination of lower prices, lower interest rates, higher salaries and a home that checks every box.
That combination may never arrive.
And while waiting can sometimes be the right financial decision, waiting without a plan is something entirely different.
Here in the Comox Valley and Campbell River, we have a range of housing types, from smaller condos to townhouses and detached homes.
Not every property is suitable for every buyer, and not every entry-level home is affordable. But the first step should be finding out what’s possible, rather than assuming the only option is a detached house.
Perhaps the conversation needs to change from:
“What kind of house do I want?”
To:
“What could I comfortably afford today that might help me get where I want to be in five or ten years?”
That’s a much more useful question.
The bottom line.
Canada’s K-shaped economy is real, and the gap between households with substantial assets and those without them deserves serious attention.
We need more housing supply, more attainable ownership options and policies that help Canadians build financial security.
But I also think we need to bring back the idea of the starter home.
The modest first purchase.
The little condo with the dated kitchen.
The townhouse that’s not quite in your favourite neighbourhood.
The home that doesn’t check every box but makes financial sense.
Because your first home doesn’t have to be your dream home.
It just has to be a sensible first step.
And maybe, instead of asking whether you can afford the house you want, it’s time to ask whether you can afford a home that helps you get there.
That’s a conversation I’d be happy to have.
Catherine Worthy
Worthy Real Estate | Comox Valley & Campbell River
Sources and references
1. Statistics Canada: Survey of Financial Security, 2023
Published October 29, 2024. Source of the median net worth comparison for families under 35: $457,100 for homeowners and $44,000 for families without a principal residence.
https://www150.statcan.gc.ca/n1/daily-quotidien/241029/dq241029a-eng.htm
2. Statistics Canada: Research to Insights, Perspectives on Affordability and Inequality
Published 2025. Documents the importance of housing equity to wealth accumulation among younger Canadian families. Nearly half the increase in their median net worth from 2019 to 2023 was attributable to growth in real estate equity.
https://www150.statcan.gc.ca/n1/pub/11-631-x/11-631-x2025001-eng.htm
3. Government of Canada: Minimum Down Payment Requirements
Explains Canada’s minimum down payment rules, including the 5% minimum for eligible purchases of $500,000 or less.
https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html
4. Canada Mortgage and Housing Corporation: Mortgage Loan Insurance Costs
Provides mortgage default insurance premium rates, including the standard 4% premium for mortgages with a 90.01% to 95% loan-to-value ratio.
https://www.cmhc-schl.gc.ca/consumers/home-buying/mortgage-loan-insurance-for-consumers/cmhc-mortgage-loan-insurance-cost
5. Government of British Columbia: First-Time Home Buyers’ Property Transfer Tax Exemption
Explains eligibility, exemption amounts and applicable purchase price thresholds.
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers/current-amount
6. Canada Revenue Agency: First Home Savings Account
Explains FHSA eligibility, contribution limits, tax deductions and qualifying withdrawals.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html
7. Illustrative mortgage calculation
Based on a hypothetical $350,000 purchase, $17,500 down payment, $13,300 mortgage insurance premium added to the mortgage, 4.5% fixed interest rate calculated monthly, and 25-year amortization. Assumes unchanged mortgage interest rate and regular payments over five years.
The 2% annual property appreciation assumption is hypothetical and is not a market forecast. Calculations exclude acquisition and disposition expenses, interest and other ongoing ownership costs from the equity figure.
Catherine Worthy, REALTOR® · Worthy Group | Oakwyn Realty Ltd. | BC Owned & Operated
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