You need to make nearly $88,000 a year to afford a house, website says

With rising home prices, student loans and challenging job prospects, the idea of purchasing seems to be out of reach for many Calgary graduates.

Since 2015, house prices have rocketed more than three times faster than wage growth across the country, according to an online article by The Globe and Mail.

While a typical home in Calgary, one of the country’s five biggest housing markets, sells for approximately $443,744, a study by Blue Chip Mortgage and RentSeeker.ca said that to afford a house, one needs to make at least $87,761 per year.

To Buy or To Rent: A for-sale sign is posted in front of a house in the community of Dalhousie in Calgary on Sunday, Nov. 12, 2017. While a typical home in Calgary, one of the country’s five biggest housing markets, is sold for approximately $443,744, a study by Blue Chip Mortgage and RentSeeker.ca said that to afford a house, one needs to make at least $87,761 per year. (Photo by Linh Hoang/The Press)

“It feels like most of us are unable to keep our heads above water. It really seems like it,” said Ron Nguyen, a former student at the University of Alberta.

The 24-year-old Nguyen is in a situation that would be familiar to many graduates. He has put off such major purchases because of his student loan repayments.

“It is tough to save enough cash for a down payment, since more than 25 per cent of my monthly income already goes into tuition debts,” said Nguyen.

“I don’t even want to think about taking on another debt. It doesn’t make any sense to tie myself down, both emotionally and financially.”

Lorraine MacDonald, 22, a last-year college student, said that carrying student loans has also restrained her from buying a house.

“Home ownership is something I had never thought about. Because in a year’s time, I will be $28,000 in debt. Where do I go from there?” she said.

“I have rented for the past six years, and I will rent until I have my loans paid off and proper savings,” said MacDonald.

“It is better to be safe than sorry, especially when it comes to money.”

The student debt burden, however, is not the only reason causing graduates to put off buying their first home.

Jose Villela, 21, a former engineering student from the University of Calgary, said that while finding work in the oil and gas field remains exceedingly difficult, and has affected his decision to buy a house.

To Buy or To Rent: Jose Villela, 21, a graduate student from the University of Calgary, poses for a picture in Calgary on Sunday, Nov. 12, 2017. “Without having a reliable source of income, to me, renting seems like a better option that involves less money and commitment,” said Villela. (Photo by Linh Hoang/The Press)

“I rent because having just graduated, I don’t believe that I am in a right position, economically, to think about buying a house,” said Villela.

“Without having a reliable source of income, renting seems like a better option for me that involves less money and commitment.

“Not to mention that as an international student, I am uncertain if I want to stay in Calgary for the foreseeable future, which makes me prefer to rent for now.”

Vicky Huynh, 27, a recent graduate from SAIT, said that renting has become affordable for her due to the economic downturn.

“There are a lot of houses and apartments for rent with great deals, like a free first-month rent, or a free cable for a 12-month lease,” said Huynh.

“I have shared the rent with my sister, so it has been very affordable for us.”

Huynh said, as an international student, most of her savings have gone to pay tuition fees.

“As a result, having enough for a down payment right after graduation is almost impossible,” she said.

“Eventually, I will start thinking of purchasing a house, when I believe my income is more financially stable,” said Huynh.

“But for now, I am comfortable with renting.”

Moshe Milevsky, an associate professor at the Schulich School of Business at York University in Toronto, said in an online article on Global News that there are many factors to consider when deciding to rent, or to buy.

First-time buyers should think about their five-year plan.

“If you’re not sure where your future career is headed, you should consider renting,” said Milevsky.

Home buyers should also be aware of “hidden costs” of owning a home, according to Milevsky.

“If something needs to be fixed, you will be on the hook for the costs of maintaining a house.”

If you’re not sure where your future career is headed, you should consider renting. – Moshe Milevsky

Lastly, there are some other closing costs, such as land transfer taxes, appraisal, and home inspection fees, that first-time owners will need to also consider.

“If we don’t plan carefully, buying a house can turn into a financial nightmare,” said Huynh.

“Meanwhile, rental prices will likely go higher in the future, so take the time to strategize whenever you are ready to put down roots.”

About Linh Hoang 4 Articles
As a writing and communications major in the journalism program at SAIT, Linh Hoang worked as a reporter for The Press during the 2017-18 academic year.

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