House hunting hurdles for newcomers to Canada

posted on April 11, 2019

By Canadian Immigrant Magazine

Impossibly high real estate prices, unreasonable rental landlords and credit history woes are just some of the house hunting horrors that newcomers face in Canada

Such is the ordeal of finding a home to rent or buy in Canada that when we zeroed in on a couple of newcomer families who were in the midst of house hunting, they did not really want to speak about their experiences. They were simply too stressed out!

“The first eight months in Canada were a nightmare for us,” recounts Satish Pandya (name changed for privacy), who bought a home in Mississauga this fall with his wife and five-year-old son. “Initially we thought about renting because we were told that we do not have a strong credit history in the country to qualify for a mortgage. But we were stunned by the steep rental rates — we were paying $2,100 for a two-bedroom apartment!” he says.

After much debate with his wife about putting down a healthy amount for their down payment and being realistic about what their first home should be (he wanted a detached, but his wife convinced him to go for a less lavish semi), the Pandyas finally settled on a semi-detached home in a reputable school district. “At least we aren’t bleeding money on rent. Though the monthly mortgage payments are going to be slightly stressful, we are hoping to manage,” he says.

Some interesting stats came up recently in the annual mortgage consumer study conducted by the Canada Mortgage and Housing Corporation (CMHC); 85 per cent of first-time homebuyers reported spending the most they could afford on their property. This means a lion’s share of their monthly income, leaving little for other expenses. Despite stretching themselves to the limit, 76 per cent of the respondents said they were determined to make their monthly mortgage payments.

“Real estate is a great investment and it is the immigrant dream to buy their own home in Canada. Times are difficult as prices are rising from coast to coast. But my mantra is, ‘Don’t wait too much; do your research, get your information in order … and just buy it!” advises Brazilian-born mortgage broker Andreia Guariento.

That may be easier said than done.

The price of real estate is high
According to the recent Demographia International Housing Affordability Survey, Vancouver housing is the second least-affordable in the world after Hong Kong. Toronto isn’t that far behind.

Discouraged by these high rates and not being able to qualify for mortgages, newcomers and young Canadians are flocking to rent. But the surge in the cost of homes and the number of renters have paved the way for unreasonable demands and increasing rental rates from landlords. A Toronto realtor not wishing to be named relates how landlords have been asking for six months’ rent in advance as opposed to the standard first and last month’s rent for the deposit.

“This young family from Sri Lanka was all set to move into a downtown condo in Toronto and it was a hole in the wall, with space fit only for a bachelor, but he had a family of three. He had to shell out $300 extra because he was a new immigrant. We were told it was because he was new to the country, with no guarantee of employment, though he was working with a company downtown at the time. Inflating the rent for newcomers is just adding onto the stress of renting a suitable home, especially when rates are skyrocketing,” says the realtor.

Affordable housing, for both renting and buying, has been a hot topic for a while, and solutions have been hard to come by. In this year’s federal budget, the Canadian government launched the First-Time Home Buyer Incentive, which will see CMHC provide interest-free loans to eligible first-time homebuyers, equaling 10 per cent of the purchase price of their newly built home or five per cent of a resale. The government has earmarked $1.25 billion toward this “shared equity mortgage” strategy, which is meant to help first-timers take out smaller mortgages and lessen their monthly payments.

Read more