Buying your first home isn't easy, even in Sask. Here's how two people in their 20s did it

Sarah Radke is thrilled to finally be able to live in her own home after years of saving and sacrificing.

"It's exciting and nerve-racking and scary," the 23-year-old said.

Owning a home in Saskatchewan isn't as easy as it used to be.

For people in their 20s and 30s diving into the residential real estate pool, the waters are getting choppier. Without a boost from the bank of mom and dad, an inheritance, or a good credit score, that dream of owning a home is slipping further away.

Radke makes about $65,000 a year from her main job and another $10,000 annually from one she works on weekends.

How did she do it? 

The total cost of her home was $272,000. She made a down payment of 20 per cent ($55,000) and pays $1,264/ month toward her mortgage, one with a 25-year amortization period. She secured an interest rate of 4.99 per cent, locked in for a five-year term.

Radke had been saving for almost a decade, working multiple jobs through high school, university, and even until recently she'd been saving 90 per cent of what she earned toward the down payment.

"I'm just like really lucky that like I was able to live at home for so long and be able to save up so much money. And then I was able to find the jobs that I have and be able to save up," she said.

Saving that money while living with parents still wasn't easy, "It sucks being in high school and not being able to go out with friends, being in college and not being able to go to drinks with buddies, not being able to go on trips, because you're saving up," she said.

Even with the help and years of saving, she had to settle for a home that needed work.

"Anything under $300,000 either needs shingles or it needs windows or it doesn't have AC or it needs paint .. do in the inspection and there's a hundred more things that need to be done," she said as she painted the walls of her new home.

Current real-estate market in Saskatoon 

The benchmark price — the typical price of a home — in Saskatoon rose to $406,500 in July.

Real estate market analyst Josh Buchanan said it's been a historic summer with record highs for home prices including single detached houses, condos, and townhouses.

The benchmark price of a home in Saskatoon in July rose to $406,500 for a composite home, meaning it has three bedrooms, two bathrooms and a garage. For a single-family home it rose to $467,300, for a townhouse $332,500 and an apartment $237,800. (Saskatchewan Realtors Association)

He also said current inventory is the lowest in 16 years, whereas sales are the highest in that period.

"It's affecting prices because you have a high number of people wanting to buy and not many options available," Buchanan said. He said recent interest rate cuts by the Bank of Canada are also increasing consumer confidence sending people back into the market.

"When that happens, the market becomes very competitive and people end up having bidding wars or giving the sellers exactly what they're asking for the first day it's listed," he said.

What can you do? 

Buchanan said buyers need to be more prepared than ever because the market is completely different from what it was a few years ago. He suggested would-be buyers get pre-approved for mortgages before they go shopping, get on a realtor's email list to see listings and most importantly — being quick.

Financial advisor Dennis Carson echoed Radke and Buchanan saying younger buyers either need family help, make massive changes in their lifestyle or somehow increase their income.

"Could someone making $70,000 save $15,000 in a year? I don't believe so," he said.

A person making $70,000 a year would have to save $500 each month for at least three years to save a down payment of $15,000-18,000 for a $300,000 home in Saskatoon.

Mortgage interest rates, which have climbed in recent years as the Bank of Canada worked to cool inflation, are also a point of contention for new homebuyers like Radke, who views her current 4.99 five-year fixed rate as high.

"It feels like a lot and like I missed my chance knowing lower rates were just a couple of years ago," she said.

Carson said there are ways to save on taxes through options like a FHSA (First Home Savings Account) where buyers can put aside $8,000 a year tax-free up to a lifetime maximum of $40,000. To reap the benefits of the program, the money has to go toward buying a first home, among other requirements.

"The huge benefit of that is you get money back on your income tax, right? So if you're making 60,000, you're in a 33 per cent tax bracket. So for every thousand that you put into that, you would get back 330 bucks," Carson said.

There is also the new provision of first-time home buyers being able to take on a 30-year mortgage as opposed to 25 years, which would reduce monthly payments. The flip side is it would also mean paying five more years of interest which can add up pretty quickly.

An analysis by RBC showed that with a principal mortgage payment of $150,000, the 30-year amortization period would reduce monthly mortgage costs by just over $75, compared to a 25-year period.

But that person would pay over $20,000 in additional total interest costs because of the five-year extension.

Carson also suggests people take a close look at spending to save for a down payment, including money spent on streaming subscriptions, groceries, vacations, and going out — every dollar counts over time, he said.

Sheldon Lacerte said he wanted to buy a home for him and his family because they were tired of paying high rents and still having to live in bad conditions. (Aishwarya Dudha)

Sheldon Lacerte, 27, also recently bought his first home, one that he shares with parents who couldn't be more proud of him for beating the odds of becoming a homeowner at a young age as an Indigenous person.

He makes just over $70,000 annually and works a lot of overtime to get some extra cash. His parents are co-signers on his mortgage and help with the payments.

His home cost $380,000 with a down payment of $19,000 which comes to a monthly payment of $2,300 for 25 years. He secured an interest rate of 5.54 per cent over a five-year term.

"Getting a lot of ramen noodles and putting in extra hours at work and on side jobs," he said of what it took. "But it's a great opportunity to build equity, not just for myself, but for the rest of my family."

He said his initial budget was $300,000 but he and his family couldn't find anything they liked in that range, saying the homes either had mould, infestation, worn-out shingles, or major work needed to make it livable.

"We've had a lot of struggles — technically our family and my children should be statistics and we're not, and it's just exciting to be able to show to people that yes it's hard, it took a while to get here, but it's possible," his mother Mary Lea Lacerte said.