Canadian First-Time Homebuyers remain confident in their decision to buy, as they balance affordability, location and room to work in finding their perfect homes
Sagen MI Canada's First-time Homebuyers Study Highlights:
- First-Time Homebuyers (43%) and future home buying intenders (36%) are far more optimistic than the general population respondents (13%) in Canada in thinking that this is good time to buy a home given the state of their local real estate market.
- Half of recent first-time buyers say that while challenging, recent economic conditions including inflation and rising interest rates would not have changed their decision to buy their home, and a further quarter say these conditions have had no impact on their ability to afford their home.
- Key factors such as price and value rank most important to buyers, first-time buyers (FTB) and first-time intenders (FTI) place greater importance on their home's proximity to where they work (79%, 77% respectively) but also having space to work from home (76%, 76%).
TORONTO, May 17, 2023 /CNW/ - A survey1 released by Sagen™, the country's largest private residential mortgage insurer, analyzed key trends among first-time homebuyers who purchased a home within the last two years, and first-time intenders, who plan to buy within the next two years.
Lack of housing availability remains a key challenge as four-in-ten general population respondents say there is insufficient supply of homes available, down from 55% in 2022, but well ahead of the 26% who feel there is a normal supply or 15% who say there is ample supply. In contrast, half of general population respondents say it is a bad time to buy a home, with only 13 percent saying it is a good time to buy. Yet home buyer confidence is far greater among both recent buyers (43%) and future intenders (36%) who are more likely to say it is a good time to buy a home.
Moreover, economic conditions such as rising interest rates and inflation have had a modest impact on the decisions of recent first-time homebuyers– 26 percent say conditions have had no impact on their ability to afford their homes, while half (52%) say that while they have been challenging, they would not have changed their decision to buy a home. Among future intenders, current conditions have led 43 percent to delay the timing of when they buy their homes, while 35 percent conditions have not impacted when they will buy their homes.
Recent economic conditions have also led many recent buyers and intenders to either purchase or plan to purchase a smaller home than they expected (32% (FTB), 37% (FTI)) or to purchase a home in a more affordable neighbourhood than expected (34% (FTB), 31% (FTI)).
Encouragingly, despite economic challenges, the study shows that in 2023, fewer recent buyers than in 2021 report having to delay or suspend their mortgage payments (17%, down from 23%), and they are just as likely to be making double-up or increased bi-weekly/monthly mortgage payments as before (32%, little changed from 33%).
"These results show Canadian first-time buyers have been, and are entering the market eyes wide open, mindful of what they can afford, the trade-offs they need to make, and their own desire to achieve the dream of home ownership" says Stuart Levings, President and CEO of Sagen. "Rising interest rates have cooled home prices in many regions of the country, leaving potential sellers waiting on the sidelines for conditions to return to normal. This has made it more difficult in the short-run for prospective buyers to find the homes they want, but longer term they remain confident in their decisions to become homeowners."
The impact of the hybrid work environment is also reflected in the survey results as well – first time homebuyers and intenders both place greater importance on the proximity of their homes to where they work than they did in 2021, during the depths of COVID-19. In addition, they are placing much greater importance on having space where they or their partners could work from home – 76%, up from 64% among recent buyers, and 76%, up from 70% among future intenders. At the same time, more now rate the importance of the energy efficiency of their homes higher – 75% of recent buyers and 84% of intenders rate this important.
In search of more affordable homes, a quarter of both first-time homebuyers and intenders are choosing condominiums (24% each), steadily increasing since before COVID-19, while the proportion seeking fully detached homes has been decreasing (46%, 47% respectively).
"First-time homebuyers are expecting that the hybrid work model is here to stay" says Mr. Levings. "They are compromising on space so they can find an affordable home that is closer to work for when they need to be in-person, yet they also want room to work from home when they are able to."
The findings suggest that property developers, notably condo builders, will need to take these new considerations into mind as they design homes that will adapt to current and future needs.
Support from family to help first-time buyers has become increasingly important – more than a third (35%) of first-time homebuyers received financial help with their down payments from their families, while a quarter are receiving help with monthly mortgage payments from their families. If these buyers had not received financial assistance, most recent buyers would have either delayed purchasing until they had saved a larger down payment (44%) or would have been able to buy their current home with a smaller down payment (42%).
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1 The survey was conducted between February 22, 2023 to March 27, 2023 by Environics Research. See 'About the Survey' at the end of the release for survey methodology. |
The study was completed by Environics Research on behalf of Sagen.
A total of 2,223 interviews were conducted with Canadians aged 25-45 who had purchased their first home within the prior two years, or who plan to purchase their first home within the next two years. Online interviewing was completed between February 22 and March 27, 2023. Quotas were set to oversample in urban regions with weighting to bring them into overall national proportions.
Sagen MI Canada Inc., operating through its wholly owned subsidiary, Sagen Mortgage Insurance Company Canada (doing business as SagenTM, is the largest private sector residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Sagen differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For more than two decades, the Company has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at March 31st, 2023, the Company had $6.7 billion total assets and $2.8 billion shareholders' equity. Find out more at www.sagen.ca.
For further information, please contact:
Susan Carter
Vice President, Marketing and Communications
SagenTM
905-287-5520
David MacDonald, Group Vice President, Financial Services
Environics Research
416-278-3067
SOURCE Sagen MI Canada Inc.
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