Housing affordability series: Newmarket man hopes he can move out of parents' basement by time he is 30

YorkRegion.com
Sept. 6, 2016
By Lisa Queen

At 24, Nick DeRyck has done everything anyone could expect of him as a young adult.

After graduating from Newmarket’s Huron Heights Secondary School, he completed a two-year police foundations course, choosing Seneca College’s nearby King campus, in part so he could live at home to save on expenses.

While he plans on a career as a police officer, he now works at Cardinal Golf Club in King for his third season, recently wrapped a part-time summer job with a beer company and will once again get a job for the winter, hopefully this time something more career-oriented than the snowplowing jobs he’s had in the past.

While he has a couple of hobbies that cost him money - buying guitars, purchasing car parts for his 1986 Firebird and playing goalie on a hockey team - DeRyck has saved about $12,000 towards buying a home.

But he wonders if he’ll ever have enough money to move out of the basement of his parents’ semi-detached house, for which he pays $400 a month in rent.

While he gets along well with his parents and two siblings, DeRyck is hoping his frugal lifestyle will allow him to buy his own home by the time he turns 30.

“I don’t mind (living at home) at the moment but I definitely don’t want it to be a lifelong thing,” he said while sitting at the family’s kitchen table.

“It’s kind of discouraging that the prices are getting ridiculously high. Here in Newmarket, I think the lowest house would probably be, if you’re lucky, around $600,000.”

While DeRyck knows past generations had to save and work hard to get their footing in life, he feels today’s sky-high housing market makes it that much more daunting for today’s young people.

“The down-payments are ridiculous amounts of money now. Even to get your foot in the door is extremely hard. It just makes you feel like it’s going take forever,” he said.

He is left wondering how far away he will have to move to afford a home.

DeRyck is far from alone, according to Bradford mortgage broker James McNeill with Centum Mortgage Professionals Corp.

“The opportunities are not there. When I graduated school or even when I was going to university, I could work (at a well-paying factory job) and earn enough to move out of the house. I moved out of the house at 18,” he said.

“Right now, that is unrealistic because of the cost of living and the opportunity to earn is not there, it’s just not there.”

A report released last month by TheRedPin Brokerage, a Toronto area web-based realty service, shows the dizzying housing prices in the Greater Toronto Area.

To buy a detached home in the GTA, where the average price is $950,000, you need a household income of $165,000.

For a semi-detached home, with an average price of $661,760, your household income needs to be a minimum of $117,860.

The average priced $603,900 townhouse requires a household income of $108,370.

You need a household income of $74,827 to buy a condo, which costs an average of $406,845.

For DeRyck, even staying in Newmarket, one of the less expensive communities in York Region, is doubtful at best.

With the average cost of a home being $761,000, he would need a household income of $134,600 and could expect mortgage payments of $2,725.

By comparison, the average price of buying a home in Aurora is $941,000, requiring a household income of $162,740, while in Markham it is $960,100, making a minimum household income of $161,660 necessary,.

In Richmond Hill, the average price is almost $1.07 million, necessitating a household income of $179,550, while Vaughan’s average price of $921,700 requires a household income of $156,730 and Whitchurch-Stouffville’s average price of $920,460 requires a household income of $157,680.

McNeill offered a number of tips for young people considering buying a house:

• You can buy a house for as little as 5 per cent down, however the non-traditional mortgage would have to be insured by the Canadian Mortgage and Housing Corp.
• Budget properly. Your monthly housing costs should not be more than 32 per cent of your gross monthly income and your entire debt load should not be more than 40 per cent of your gross monthly income.
• Save your money. Sure, the latest tech toy may look good but keep your eyes on your long-term goal of home ownership. For example, consider living at home during your post-secondary years and even after your graduate.
• Keep debt to a minimum.
• Maintain a good credit rating.
• Consider buying outside the GTA.
• Consider employment outside the GTA where there are lower housing costs.
• Lenders will generally want to see you have two years’ employment history before approving you for a mortgage.
• Set aside 1.5 per cent of the cost of your home for closing costs such as legal fees.