An under-construction condo building in Langford is offering an alternative to the traditional home purchasing model which may prove an attractive option as house and rent prices continue to grow beyond the reach of many in Greater Victoria.
Studios, one bedrooms, and two bedrooms at Centennial Court on Carlow Road are set to go on sale in the near future, with move-in expected over the winter. Potential residents will have the option to sign up for EP Homes’ Bridge to Homeownership program as an alternative to either buying a unit outright with cash, or with a traditional mortgage.
“What EP does … is they really help educate people and guide them financially so they can create savings,” said Island Realm Real Estate co-owner Tony Zarsadias. “There is a typical security deposit like you would have in any rental, then there are two components to your monthly payments: First is the rent, which is established by a third-party appraiser … and then the second component is the savings component, which is effectively going to save that person the five per cent they need down to qualify for a mortgage, over three years.”
Once the down payment has been saved up, Zarsadias said the renter is then able to buy the unit from EP Homes at “market rate” through a conventional mortgage, which EP Homes will help the renter apply for.
Zarsadias, whose firm Iron Clad Developments has partnered with to sell units in the building, said the goal of the program is to allow people who could afford monthly mortgage or rent payments, but not the down payment required to secure a mortgage, an opportunity to get into home ownership more easily.
Paul Schure, a professor with UVic’s department of economics, said there is a clear need at a societal level to make home ownership more accessible, and for some buyers, the program on offer from EP Homes could be very attractive.
“Home ownership is not impossible, but it has become a lot harder than it was say 25 years ago,” said Schure. “I do see a need, and I do see a potential market for what EP Homes is offering.”
But he notes there are some important caveats to keep in mind, and it may be possible to get a better deal by perusing parts of the EP Homes deal through traditional avenues.
For example, it may be possible for potential homeowners to simply save up for a mortgage down payment themselves, and if they are careful with how they invest their savings, they may be able to come out with more than the minimum needed for a down payment. And while the convenience of having all elements of the deal with one company is certainly appealing to many, Schure is generally cautious about putting too many eggs in one basket when it comes to a person’s financials.
Despite the cautions though, he sees such alternative paths to home ownership expanding and becoming more commonplace, though he doubts they will become mainstream any time soon.
“Offering a viable path to home ownership is a very important societal problem that is not being solved adequately in the Greater Victoria, and the wider North American context,” said Schure. “I think some of the solutions will need to come from government, but that is tough because you do not want those interventions to become so draconian.”
One example of government intervention is on display right on the West Shore in the form of the City of Langford’s attainable housing program, which sees the city make contributions to eligible first-time home buyers’ down payments.
As of Oct. 20, the city told Black Press Media more than 800 people have expressed interest in the program, which is still in its early stages, with 12 having formally applied with all the required documents, five have been accepted into it, and one has already purchased a condo.