A majority of Canadians believe now is a good time to buy a home and, depending on the age group and location, stress levels about making a purchase vary.
These are just two of the findings found in a new study by Mortgage Professionals Canada, which surveyed more than 4,100 Canadians about their home-buying thoughts.
“Overall, Canadians are feeling optimistic about the housing market and the economy. Economic growth contributes to higher incomes and consumers’ ability to make solid downpayments and manage household debt,” said Paul Taylor, president and CEO of Mortgage Professionals Canada. “Even in the pressured housing markets of Toronto and Vancouver, personal circumstances, rather than a sense of urgency, are influencing purchasing decisions. The significant surge in demand for new homes in Toronto in the early spring was an aberration. Fortunately, it was short lived.”
Four different buyer groups were identified for the survey: Downsizers (homeowners who are currently looking to purchase a smaller or less expensive home, or to move to a rental dwelling or care facility); move-up buyers (homeowners who are currently looking to move to a more expensive home); next generation buyers (renting or living with parents or other family members, and born in 1964 or later), and; recent buyers (purchased a home in February 2016 or later).
Here are some highlights from the study:
55 per cent of Canadians feel now is a good time to buy a home. Significantly, only 44 per cent of next generation buyers think now is a good time to buy, compared to recent buyers (67 per cent), move-up buyers (58 per cent) and downsizers (52 per cent).
Next generation home buyers in Toronto and Vancouver have the highest stress levels around home purchasing decisions while those in Atlantic Canada and Quebec have the lowest.
Next generation buyers aren’t motivated by market conditions or the fear of missing out but are motivated by their personal circumstances.
Canadians generally consider mortgages as good debt with recent home buyers most positive.
Only 46 per cent of Canadians were aware of changes to Canada’s mortgage rules. Awareness is significantly lower among the next generation of home buyers (29 per cent) while awareness is significantly higher among recent buyers (55 per cent).
Prior to discussions about the mortgage rule changes, two in 10 Canadians said they plan to rent a part of their home, while one in 10 plan to buy jointly with someone other than their significant other as strategies to afford homeownership. However, that changed to three in 10 and just over one-quarter respectively after being presented with the market implications of the new stress test.
About 20 per cent of potential buyers would be disqualified by the stress test, based on a hypothetical rate of 4.64 per cent.
Of those who said that they would increase their down payments to avoid the stress test:
• 31 per cent would withdraw from RRSPs,
• 16 per cent would obtain loans from financial institutions,
• 43 per cent would delay their purchase, and
• 30 per cent would seek help from family (gifts/loans).