With home prices set to climb again, what’s the outlook for first-time buyers?

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Rising home prices and higher interest rates mean the challenges facing prospective first-time buyers show few signs of abating, said a prominent real estate executive.

John Lusink (pictured top), president of Right at Home Realty and Property.ca, told Canadian Mortgage Professional that while some new entrants to the market enjoyed a measure of relief at the height of the COVID-19 pandemic due to dramatically lower borrowing costs, a return to more conventional market conditions had erased that advantage.

“In 2021, I think buyers weren’t buying houses – they were buying payment plans,” he said. “Interest rates were so low that whether it was $1 million, $1.5 million, it didn’t matter. They were looking at a point and a half and saying, ‘Well, I can afford the payment.’ Today, of course, they’re being qualified at a much higher rate, and so price does matter. And so they aren’t qualifying.

“The outlook for the first-time buyer, if they aren’t long-term well employed and earning $125,000-plus, is bleak.”

What are authorities doing to help ease the affordability crisis?

The federal government’s latest budget announced the introduction of a new First Home Savings Account (FHSA), available as of April 1, aimed at helping new buyers stash away savings to afford a downpayment on their first home.

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