It’s increasingly becoming more unaffordable for millennials to buy a house close to the downtown core of major cities like Vancouver and Toronto. Our generation is faced with a few options: Continue renting, buy a house in the suburbs, buy a condo, or relocate to a small town.
The latter is what first-time homebuyer Kayla Green did when she purchased a small house nestled in the Rocky Mountains.
Janine: Tell us about your home.
Kayla: The home is a one-floor bungalow that was built in the 1920s with two bedrooms and two full bathrooms. It’s just over 900 square feet and the lot is only about 2,800 sq ft. Small, but that’s exactly what I want. (I’d have a tiny home if they were allowed.) It is located in a very small town in the Rocky Mountains in Alberta. It was originally listed for $127,000 and I paid $120,000.
Janine: How did you know you were ready to own a home?
Kayla: I didn’t think I was, so this all kind of surprised me. I was quite happy to keep paying rent in Calgary but I still browsed properties online on a regular basis just for fun. I had a goal of living in the mountains one day and so I was constantly checking mountain properties in Alberta and British Columbia. When I saw the home online, it seemed like a really great deal so I thought I’d go check it out. I sort of fell in love with it, it made sense financially to buy it versus staying in Calgary and renting. I had the 20% down payment already saved up, and most importantly, my employer supported me by allowing me to work full time from the new home.
Janine: What are the details of your mortgage?
Kayla: Because I put 20% down, I’ve decided to structure my financing with both a home equity line of credit (65% of my mortgage) and a traditional variable-rate mortgage (35% of my mortgage). I wanted the HELOC for the flexibility of regular lump-sum payments with no penalties as well as the access to cheap available credit in the future without having to re-apply. I’m also the biggest fan of variable rates. Because I work at a bank, I was able to get very low rates.
Janine: Do you feel your emotions were involved when you purchased your home?
Kayla: Oh for sure. Looking at a home purchase from a financial perspective is the most important, don’t get me wrong, but the emotional piece has to be considered as well. You’re going to be spending a lot of time in the place. I had looked at a few other properties in the same area and some were significantly cheaper but were not at all what I wanted.
Janine: Why did you choose to buy outside of a large city?
Kayla: The main reason is because I love the mountains, the small town feel, the quiet and sense of community that comes with all that and am lucky to continue to work and receive my city salary while living there. Also, the kind of home I wanted is very affordable in a small town. In Calgary, a similar home is way out of my reach.
Janine: Do you think you were in a buyer’s market, and did this affect the price you paid?
Kayla: I think the area I bought in has always been in a buyer’s market because there are so few jobs. The majority of people who buy are usually retired or semi-retired, are coming from a bigger city, and are making the choice to move there. The people selling most likely need to leave to go somewhere else where there is work and are in a bit of a rush to get out so they can be willing to take any offer. The home I bought had been on the market for four months and I have a feeling my offer was the first. A few days after I viewed the home, the seller dropped the asking price. My offer was lower than the new asking price and was accepted. I was even able to add a buyer’s condition, which stated that the purchase price was not to exceed the appraised value. You would never be able to put a condition like that if it wasn’t a buyer’s market. The appraised value ended up coming back a lot higher than I was expecting, which was nice. I feel like I got a good deal and am happy with what I paid.
Janine: How was the process of getting a mortgage?
Kayla: Pretty easy, but only because I’ve been in banking for nearly six years and know the process in and out and what is required from the borrower.
Janine: Did you shop around and negotiate a mortgage rate?
Kayla: I am happy to say I didn’t have to which definitely saved time and stress.
Janine: Were you able to stay within your budget?
Kayla: For sure. I wouldn’t have felt comfortable buying a home at max affordability as I still want to be able to sock away money each month into savings and not be house rich and cash poor.
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