- While Vancouver has higher
home prices, first-time home buyers in Montreal are more worried about their
down payment (58% vs. 60%)
- First-time home buyers in Toronto had the highest anxiety that their
down payment would not stretch enough to buy the home they
wanted (68%)
- Of first-time home buyers who lived with their parents
before buying, almost one-fifth said that remaining at home delayed
parents' decision to downsize
- Despite higher median home values, Toronto (59%) and Vancouver (54%) respondents are most likely to
prefer proximity to work over square footage than new home buyers
in other regions studied
TORONTO, May 9, 2019 /CNW/
- A survey1 released by Genworth Canada,
the country's largest private residential mortgage insurer, in
collaboration with Royal LePage,
Canada's leading real estate
services provider, analyzed key trends among first-time home buyers
who purchased a home within the last two years.
Fifty-seven per cent of respondents nationwide said that before
buying their home they worried they might miss out on a property
they wanted because of an insufficient down payment. While
Montreal's median home price is
one third of that in Vancouver,
respondents in Montreal reported
being more worried (60%) than respondents in Vancouver (58%). Toronto respondents had the most anxiety
(68%)2.
"While interest rates remain historically low, it is not
surprising that first-time home buyers in Montreal are increasingly concerned about
their down payment," said Phil
Soper, president and chief executive officer, Royal LePage. "Montrealers have been watching
home values escalate over the past three years. Many are wondering
if they have time to grow their down payment or if they should get
in the market now as prices continue to rise."
When asked to describe their housing situation before purchasing
a first home, 25 per cent of respondents nationwide lived with
parents or relatives. Forty-three per cent of those living at home
paid rent to their families and of those paying rent, 30 per cent
paid less than the market value.
One-fifth of respondents who lived with family said that living
at home delayed their parents' own decision to downsize (17%),
while a further 15 per cent said that younger siblings would have
to leave the nest before parents can downsize. Sixty-four per cent
said their parents had no plans of downsizing when they become
empty nesters. These results support findings in Royal LePage's 2018 Baby Boomer release that
revealed although many Boomers still have children living at home,
17 per cent of them are expected to purchase a property by 2023,
representing 1.4 million potential buyers and sellers.
As affordability continues to challenge many first-time home
buyers across Canada, 48 per cent
of respondents would rather have a smaller home and live close to
work, compared to 32 per cent who value larger properties despite a
longer commute. Findings were similar in Calgary and Montreal, where 53 and 52 per cent of
first-time home buyers also preferred less time commuting between
home and work.
While Toronto and Vancouver are home to some of the highest home
prices in the country, the majority of those surveyed in both
cities responded that proximity to work was more valued than square
footage (59% and 54%, respectively). This may be influenced by
longer work commutes, with Toronto
and Vancouver residents reporting
34 minute and 30 minute one-way travel times both to/from
work.3
"Even in cities where first-time home buyers have to push
themselves to get on the property ladder, cost isn't the only
consideration when buying a first home," said Soper. "While some
young people are relocating to more affordable cities, those who
stay value shorter commutes and access to the benefits of city
life."
Regional Insights
ONTARIO
Sixty per cent of respondents in Ontario expressed anxiety about their down
payment stretching enough to get the home they wanted, compared to
68 per cent of respondents in Toronto.
"Buying a property can be stressful for anyone, but for
first-time home buyers, the anxiety is magnified by the unknowns,"
said Caroline Baile, broker, Royal
LePage Your Community Realty. "A good starting place is to define
your wishlist and focus on your priorities."
Shorter commutes were valued more than square footage in
Toronto as 59 per cent of
respondents in the region preferred a more expensive and smaller
home located closer to where they or their spouse work – the
highest regional percentage in Canada.
"There is a large portion of first-time home buyers in
Toronto who will sacrifice size
for location. Time is important – as are childcare, schools, and
proximity to work," said Baile. "Sometimes that means purchasing a
condo in the city within walking distance of work, or even living
with parents a little longer to position themselves better to get
the home they want."
Thirty per cent of respondents in Ontario and 34 per cent in Toronto lived with parents or other relatives
before buying their first home, surpassing the national average
(25%).
QUEBEC
Fifty-one per cent of respondents in Quebec (excluding Montreal) expressed anxiety about their down
payment stretching enough to get the home they wanted, compared to
60 per cent of respondents in Montreal.
"While those who live in other parts of the province have the
convenience of time and can shop around, we are seeing that
first-time home buyers in Montreal
are feeling the pressure to make quick decisions to enter the
market," said Dominic St-Pierre,
vice president and general manager, Royal
LePage, for the Quebec
region. "Low inventory and high demand have encouraged an increase
of multiple offers in the city in favour of more experienced
buyers. First-time home buyers have to be prepared and secure
financing prior to making an offer, with a sufficient down payment
and mortgage pre-approval if they are serious about a
purchase."
Nearly one quarter of Montrealers (23%) lived with family prior
to buying their first home, compared to 16 per cent elsewhere in
Quebec. Compared to the rest of
the country, Quebec is the
province with the most significant gap between the largest urban
centre compared to the rest of the province when it comes to
first-time buyers paying rent to their parents before purchasing
their own home. Seventy-four per cent of respondents in
Montreal said they did not pay
rent to their family or relatives compared to only 53 per cent of
Quebecers (outside Montreal).
BRITISH COLUMBIA
Fifty-six per cent of respondents in British Columbia expressed anxiety about their
down payment stretching enough to get the home they wanted,
compared to 58 per cent of respondents in Vancouver.
"Early generational wealth transfer from downsizing Baby Boomers
has given a financial boost to first-time home buyers," said
Adil Dinani, real estate advisor,
Royal LePage West. "Despite some
softening in prices, first-time home buyers are optimistic about
the long term health of the region's real estate market."
Twenty-seven per cent of respondents in British Columbia lived with family before
buying a home. Fifty-eight per cent of those living at home paid
rent to relatives, and of those paying rent, 45 per cent paid below
market rates.
Of the respondents who lived at home before buying, 14 per cent
said that living at home delayed their parents' decision to
downsize.
Forty-six per cent of respondents in B.C. chose to buy a more
expensive, smaller home located close to where they/their spouse
worked compared to 54 per cent of respondents in Vancouver.
"There will always be an attraction to buy in the city centre.
In Greater Vancouver, there are
newly-developed urban amenities and transportation infrastructure
that increase the desirability of homes outside the core," said
Dinani. "These high density hubs create opportunities for people
who are new to the market; they can embrace urban living with more
space and connection to transit."
ALBERTA
Forty-nine percent of respondents in Calgary expressed anxiety about their down
payment to get the home they wanted, compared to 62 per cent
elsewhere in Alberta.
Among Calgarians living with family before buying a home, 47 per
cent said their parents did not have plans to later downsize.
Twenty per cent of respondents said staying in the home did delay
their parents' decision to downsize while 31 per cent indicated
they had siblings who would need to move before parents could
downsize.
"There's definitely more opportunity in Calgary," says Corinne
Lyall, broker and owner, Royal LePage Benchmark. "You have a
larger population of younger people who are very career-focused,
with more buying ability. There are also a number of Baby Boomers
who are in a position to help their millennial children purchase
their first home."
Forty-two per cent of those surveyed in Calgary said their home location represents a
similar commute for both spouses/partners, representing the highest
percentage compared to other regions. The national average is 36
per cent.
ATLANTIC CANADA
The Atlantic Canada region
bucks the trend for anxiety in relation to their down payment.
Fifty-four per cent of those surveyed said they were not worried
about their down payment compared to 41 per cent nationally.
"Home prices are not outside the reach of younger Canadians in
Atlantic Canada. We still see
buyers getting help from 'the bank of Mom and Dad' but there's
fantastic affordability and opportunity here," said Marc Doucet, broker of record, Royal LePage
Atlantic.
Seventy-four per cent of those surveyed in Atlantic Canada rented before purchasing their
first home. Twenty per cent of respondents in Atlantic Canada lived with family before
buying a home; 54 per cent paid rent to relatives, while 17 per
cent paid market rates. Among those respondents who lived at home
before buying, 20 per cent reported their parents delayed plans to
downsize until the respondents moved out of the family home.
PRAIRIES
Fifty-seven per cent of first-time home buyers in the Prairie
provinces were worried about their ability to get the home they
wanted with their down payment.
When it came to proximity to work, 39 per cent of respondents in
Manitoba and Saskatchewan preferred a relatively more
expensive, smaller home in exchange for a shorter commute.
"Where you live dictates how you live," offered Michael Froese, broker and managing partner,
Royal LePage Prime Real Estate. "A lot of first-time home buyers
are looking at their purchase not just as a home, but as an
investment as well. When it comes to resale value, choosing a good
neighbourhood is part of the decision. You can always improve the
house; you can't change the location. Good advice for new home
owners is to budget for some renovation and repairs."
Among those living with family before buying a home, 71 per cent
said their parents did not have plans to later downsize. Thirteen
per cent of respondents said staying in the home did delay their
parents' decision to downsize while 7 per cent indicated they had
siblings who would need to move before parents could downsize.
Thirty-six per cent of respondents in the Prairies paid rent to
families at below market rates before purchasing their own home,
slightly higher than the national average of 30 per cent.
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About the Survey
A total of 1,893 interviews were
conducted by Environics Research with Canadians aged 25-40 who had
purchased their first home within the prior two years. Online
interviewing was completed between February
15 and March 15, 2019. Quotas were set to oversample in
urban regions with weighting to bring them back into overall
national proportions for reporting.
About Genworth MI Canada Inc.
Genworth MI Canada Inc.
(TSX: MIC) through its subsidiary, Genworth Financial Mortgage
Insurance Company Canada ("Genworth Canada"), is the largest
private residential mortgage insurer in Canada. The Company provides mortgage default
insurance to Canadian residential mortgage lenders, making
homeownership more accessible to first-time home buyers. Genworth
Canada differentiates itself through customer service excellence,
innovative processing technology, and a robust risk management
framework. For more than two decades, Genworth Canada has supported
the housing market by providing thought leadership and a focus on
the safety and soundness of the mortgage finance system. As at
December 31, 2018, Genworth Canada
had $6.9 billion total assets and
$4.1 billion shareholders' equity.
Find out more at www.genworth.ca.
About Royal
LePage
Serving Canadians since 1913, Royal LePage is the country's leading provider
of services to real estate brokerages, with a network of more than
18,000 real estate professionals in more than 600 locations
nationwide. Royal LePage is the only
Canadian real estate company to have its own charitable foundation,
the Royal LePage Shelter Foundation, dedicated to supporting
women's and children's shelters and educational programs aimed at
ending domestic violence. Royal
LePage is a Brookfield Real Estate Services Inc. company, a
TSX-listed corporation trading under the symbol TSX:BRE.
For more information visit: www.royallepage.ca.
1
|
The survey was
conducted between February 15, 2019 to March 15, 2019 by Environics
Research, a premier marketing and analytics company in North
America.
|
2
|
According to Q1 2019
Royal LePage House Price Survey, the aggregate price of a home in
Greater Montreal Area is $406,332, while the aggregate price of a
home in Greater Vancouver is $1,239,306.
|
3
|
Statistics Canada
"Average one-way commuting duration (in minutes)," census
metropolitan areas, 2016
|
SOURCE Royal Lepage