First-Time Homebuyers Report
Tania McCormack
FNCE 2130 – 001
April 11, 2013

Introduction
In Canada an average first-time homebuyer is 29 years old, with the expectations that they will spend $300,000 on their new home and have a down payment of $48,000 (Nguyen, 2013, para. 1). However, the average price to be spent on a first home in Canada varies from province to province; the average price ranges from $202,000 in Atlantic Canada to $406,000 in Alberta (Nguyen, 2013, para 3). As a home is a significant investment there are numerous factors that need to be considered when purchasing; these factors include: the Canadian and Alberta housing market, saving for a down payment, and obtaining a mortgage.

Canadian Housing Market
According to the Canadian Mortgage and Housing Corporation (CMHC, 2013), the new housing starts for single family homes in Canada are expected to slight increase in the first half of 2013 and have a modest increase in the latter half of 2013 and throughout 2014 (p.2). However, it is expected that multi-family home starts will decrease in 2013 and have a moderate increase in 2014 (CMHC, 2013, p.2). The market in Canada for the resale of homes is expected to remain stable in 2013 and then rise with the economy in 2014; this is due to the current balance between buyers and sellers in the market (CMHC, 2013, p. 2). The pricing of resale houses in Canada is expected to grow at the inflation rate, or slightly below the inflation rate; this is also due to the balance of buyers and sellers in the market (CMHC, 2013, p.2). The average price forecasted for a resale home in Canada in 2013 is $367,500 and in 2014 the average price is forecasted to be $377,300 (a 2.7% increase from 2013) (CMHC, 2013, p. 22). This average price differs from what first time homers buyers are expecting to spend; in a recent survey it was noted they expect to spend $300,000 (Nguyen, 2013, para. 1). There is also expected to be a slight decrease in demand from first-time homebuyers due to the low population growth in the 25-34 year old age group (CMHC, 2013, p, 5). Based on the report from Canadian Mortgage and Housing Corporation it is forecasted that the housing market in Canada will remain relatively stable and prices will increase at the rate of inflation (CMHC, 2013, p.2).

Albertan Housing Market
The Albertan market for single-family dwelling new starts is forecasted to have a slight increase in 2013 and 2014 (CMHC, 2013, p.7). The number of single-family starts in 2012 was 17,492; in 2013 and 2014 it forecasted that single-family new starts will be 17,500 and 17,600, respectively (CMHC, 2013, p.7). The market in Alberta for new start multi-family dwellings is similar to the Canadian market; it is forecasted that number of new starts will decrease in 2013 compared to 2012; and in 2014 the number of new starts will have slight increase compared to 2013 (CMHC, 2013, p.7). The market for resale homes in Alberta is forecasted to have a slower growth rate in 2013 compared to 2012, (1.67% and 12%, respectively); the growth in 2014 is forecasted to be 2.3% (CMHC, 2013, p. 7). The average price in Alberta for a resale home is forecasted to be $371,200 in 2013 and $380,700 in 2014 (CMHC, 2013, p. 7). This differs from what first time homebuyers are planning on spending on homes; in a recent survey it was noted that Alberta first time homebuyers are planning on spending $406,000 (Nguyen, 2013, para 3). In Calgary the average price of a resale home is forecasted to be $422,000 in 2013, and the average price for a new start single-family home is forecasted to be $583,000 in 2013 (CMHC, 2012, p. 7).

Saving for a Down Payment
For a first time homebuyer at least 5% of the purchase price of the home is needed to obtain a mortgage (Bank of Montreal [BMO], n.d., Down Payment for a Home, para. 2). As the average first time homebuyer in Alberta is expecting to pay $406,000 for their home, a down payment of $20,300 would be needed