It took three years for Ross Davison and his wife to purchase their first home.

The Ottawa couple began looking before the pandemic but were repeatedly sidelined by rapidly rising house prices, climbing interest rates and tougher mortgage rules.

鈥淚t felt like a constantly changing game,鈥� Davison said. 鈥淭hings were always jumping just out of reach.鈥�

With a baby on the way last spring, the couple ended up scaling back their wish list and put a bid in on a suburban townhouse.

鈥淚ronically, we saw these units when we first started looking but we didn鈥檛 want to share a wall,鈥� he said. 鈥淲e ended up buying one three years later for double the price.鈥�

First-time homebuyers in Canada are facing the toughest real estate market in generations.

Skyrocketing home prices and massive interest rate spikes have driven affordability to its worst level in decades, according to a TD Economics report, leaving some first-time buyers shut out of the market altogether.

First-time homebuyers have traditionally accounted for more than half of all purchases. But that share has been declining since the pandemic began, reaching a low of 46.8 per cent in June 2021 as real estate investors and multiple-property owners picked up the difference, TD said.

Although house prices are beginning to edge down, overall affordability hasn鈥檛 improved.

鈥淭he drop in prices has not offset the effect of higher interest rates,鈥� said RBC economist Robert Hogue. 鈥淥ur affordability measure is still deteriorating.鈥�

Real estate experts say there鈥檚 a steeper-than-usual learning curve ahead for many first-time homebuyers. Still, they say there are tips and tricks that can help.

鈥淭he home ownership dream is not dead,鈥� Hogue said. 鈥淚 think it can still be achieved by showing flexibility on when to achieve it and what form it鈥檚 going to take.鈥�

The first call all prospective first buyers should make is to a real estate agent, said Despina Zanganas, a Toronto Realtor with PSR Brokerage.

鈥淧eople often wait too long to try and find a Realtor,鈥� she said. 鈥淚 suggest reaching out to Realtors a year before you plan to buy.鈥�

Buyers often rely on word of mouth to find a real estate agent, but Zanganas said it鈥檚 important to shop around.

鈥淚t鈥檚 important to find someone you connect with and is right for you,鈥� she said.

The next step is to figure out what you can afford, Zanganas said.

鈥淚鈥檝e had first-time homebuyers that say they want to buy a house in (affluent Toronto neighbourhood) Rosedale and they have a $900,000 budget,鈥� she said. 鈥淎 mortgage agent will help set your expectations properly.鈥�

鈥淭hey鈥檒l also flag all the additional closing costs,鈥� she added. 鈥淥ften first-time buyers don鈥檛 think about the extras.鈥�

Meanwhile, the federal government has launched several programs aimed at helping first-time buyers.

The recently announced Tax-Free First Home Savings Account gives new buyers the ability to save $40,000 on a tax-free basis towards the purchase of a first home in Canada.

鈥淚t鈥檚 a powerful way to come up with a down payment for a first home,鈥� said James Laird, co-CEO of Ratehub.ca and president of CanWise mortgage lender.

It鈥檚 an improvement from the Home Buyers鈥� Plan, which allows Canadians to withdraw up to $35,000 from a Registered Retirement Savings Plan to come up with money for a down payment but must be repaid within 15 years, he said.

Still, the new registered plan is slated to startnext year, so Laird said it will be a few years before it helps buyers.

Another new program called the First-Time Homebuyer Incentive offers up to 10 per cent towards a new home purchase through a shared-equity mortgage with the government.

But Laird warns new buyers to steer clear of the program, noting that co-owning a home with the government is an 鈥渙dd鈥� scenario that could backfire.

鈥淲e think it鈥檚 quite detrimental,鈥� he said. 鈥淭he government becomes a co-owner 鈥� they don鈥檛 pay the maintenance costs or property taxes, but they share in the potential appreciation. We find it flawed from many angles.鈥�

Mortgage loan insurance from the Canada Mortgage and Housing Corporation allows buyers to pay a smaller down payment in exchange for a fee of up to four per cent.

鈥淭he fee is clear and upfront and there鈥檚 no muddying of who owns what,鈥� Laird said.

However, mortgage loan insurance is available only for properties with a purchase price below $1,000,000. Laird said the maximum should be higher in cities like Toronto and Vancouver.

鈥淭he government has no interest in helping affluent people buy multimillion dollar homes,鈥� Laird said. 鈥淏ut if you buy a $1.2 million semi in Toronto with no parking, you鈥檙e not some rich country club guy. You鈥檙e trying to find a home for your family.鈥�

Meanwhile, even once homeownership is finally in reach, first-time buyers should expect to feel 鈥渁bsolutely sick to their stomach,鈥� he said.

鈥淭he normal first-time homebuying experience is an emotional roller coaster.鈥�

Real estate agent Zanganas agrees, noting that first-time homebuyers are 鈥渞eally afraid of losing their shirts and making the wrong decision.鈥�

鈥淚 always warn them that once they sign on the dotted line, they鈥檙e going to worry it was the worst mistake of their life. Everybody goes through that.鈥�

After welcoming a baby girl and settling into their new townhouse, Ross Davison and his wife, Katherine MacDonald, are breathing a sigh of relief.

鈥淧art of the magic of having to be rigorous in our search is that we really got to know all the little neighbourhoods in Ottawa really well,鈥� MacDonald said.

鈥淲e opened ourselves up to things we never would have considered before and we landed somewhere we are really happy.鈥�

Brett Bundale, The Canadian Press

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