Always a renter, never a buyer: single income Sudburians frustrated with rising house prices

Since September, Sudbury's Daryl Dominique said he's lost six offers on small homes in the area.

Dominique is a first-time homebuyer and even with a good job, he said, it's been difficult to find a home in his price range on a single income.

"Like I have no complaints in terms of my salary and yet it still feels like even buying a basic starter home is just not viable," he said.

Dominique has a background in engineering and works as a product manager for Ionic Mechatronics in Sudbury.

He said he's looking for a small property in outlying areas, such as Lively, Ont. or Chelmsford, Ont., with enough space for his dog to run around a yard. 

It still feels like even buying a basic starter home is just not viable.— Daryl Dominique, first-time homebuyer

The closest he's gotten to purchasing his first home was with a $250,000 bid on a 600-square-foot home in Lively, Ont. The property was listed at $199,000 and sold for $271,000.

"I think of the people in my age range who have houses, I think half of them have a home that was previously their grandparents'," said Dominique, who is 29.

"And that's not to criticize that at all. It's obviously an ideal scenario, but it just means for those who have bought a home through the traditional process, I think I can only think of two off the top of my head, maybe three."

Dominique said being a first-time homebuyer on a single income has put him at a disadvantage when he must compete with property investors, or people who can leverage other homes.

"It's just not on the same plane of existence, like someone trying to purchase their first home or someone trying to go after an income (property)," he said.

While first-time homebuyers can withdraw funds from their registered retirement savings plan, Dominique said, a lot of his retirement savings are in a locked-in retirement account he won't be able to access until he turns 65.

"So one thing I'd like to see is perhaps a little bit more leniency on how that incentive can be used," he said.

Amanda Pride, also from Greater Sudbury, has been actively searching for her first home for two years.

"I came into the market at the absolute worst possible moment," she said.

Single income disadvantage

Pride said she's been with the same company for 15 years, but because she is on a single income she's gotten outbid on every house offer she has made so far.

Like Dominique, Pride said she's on the hunt for a smaller home that can accommodate her and her dog.

She said she's looking at homes listed in the $180,000 to $250,000 range. But at that price range she said a house might need $30,000 in repairs, and she would still need to offer well over the asking price to be considered. 

Pride said her single income has put her at a disadvantage when bidding for homes and getting approved for a mortgage.

"I'm not married, so I don't have a second income," she said. "Because I'm unmarried, I have to rent for the rest of my life? That's ridiculous." 

'Unprecedented for our region'

Tanya VandenBerg, chair of the Sudbury Real Estate Board, said listed prices for detached homes in Greater Sudbury increased by 37 per cent from March 2021 to March 2022. 

"This is unprecedented for our region," she said.

In a typical year, prices for single family homes would increase by four to five per cent, VandenBerg said.

One reason for the sharp increase, she said, has been a supply shortage. The region saw a 20 per cent decrease in listings from one year to the next. And the average price for a detached home in Greater Sudbury has reached $500,000.

A higher cost of borrowing will mean that there will be reduced capacity to engage in some of the bidding wars.— Tad Mangwengwende, senior analyst with CMHC

VandenBerg said increased housing supply would have the biggest impact on prices, but added upcoming mortgage rate hikes, due to recent interest rate increases, could also slow demand and help stabilize prices.

In its latest Housing Market Outlook, published on Thursday, the Canada Mortgage and Housing Corporation (CMHC) said housing prices will continue to rise across the country over the next few years, but that price growth should slow down in 2023-2024.

Slowing down price hikes

Tad Mangwengwende, a senior analyst with CMHC who focuses on Greater Sudbury, said higher interest rates will help slow housing price hikes.

"A higher cost of borrowing will mean that there will be reduced capacity to engage in some of the bidding wars that you would have seen highlighted all over the news these days," he said.

But despite possible relief from rapidly escalating housing prices, Mangwengwende said it will continue to be difficult for first-time homebuyers to compete.

He said first-time homebuyers, looking to purchase cheaper homes, have to compete with retired buyers who are downsizing after selling their homes at a profit.

In northern Ontario, they might also have to compete with people who sold their homes on more expensive markets and would have proceeds leftover after buying.

"Some people will take it as a sign to stay in the rental market, but how it will play out for sure is difficult to say," Mangwengwende said.