Helping Families for 30+ Years in pursuit of Home Ownership

Affordability Across Canada

TORONTO, May 14, 2021 – A survey[1] released by Sagen™, 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 homebuyers who purchased a home within the last two years. Sixty-two per cent of respondents nationwide said that before buying their first home, they worried they might miss out on a property they wanted because of an insufficient down payment. This reflects a five point increase compared to the same survey question in 2019.

“It’s not at all surprising that first-time homebuyers are experiencing anxiety about the size of their down payment,” said Phil Soper, president and CEO, Royal LePage. “Buying a home, especially your first home, is one of the biggest and most important financial investments a person will ever make. While the market is highly competitive for buyers, a real estate agent can help find similar properties in comparable, but more affordable neighbourhoods. Being properly informed and prepared can make the homebuying process easier and more enjoyable.”

While supply has shown signs of improving during the spring market, Soper added that inventory remains low for current buyers, adding more stress to an already challenging process.

Well above the national average, respondents in Canada’s largest urban centres were increasingly worried that they would not be able to afford a down payment, compared to respondents in 2019. Seventy-five per cent of first-time buyers in Toronto reported feeling worried that they would miss out on buying a home because of an insufficient down payment (68% in 2019).  Following Toronto, for the same question, Vancouver reported 69 per cent (58% in 2019) and Montreal reported 63 per cent (60% in 2019).

“Although COVID-19 has impacted first-time buyers across the country, many have been able to save and buy their home sooner than expected,” said Stuart Levings, president and CEO of Sagen. “The hurdle causing anxiety for first-time homebuyers is saving for a down payment in an environment of rising home prices in many parts of the country. While some have parents who can step in, many do not and they are struggling to get into the market.”

When asked to describe their housing situation before purchasing their first home, 25 per cent of respondents nationwide said they lived with parents or relatives (unchanged from 2019). Fifty per cent of those living with family paid rent to their families (43% in 2019), and of those paying rent, 34 per cent said they paid less than the market value (30% in 2019).

Fifteen per cent of respondents who lived at home said that doing so delayed their parents’ own decision to downsize, while a further 15 per cent said their siblings would have to leave the nest before their parents could move. Sixty-three per cent said their parents had no plans of downsizing when they become empty nesters. These results were similar to findings in the 2019 survey. 

Regional Insights 

Ontario

Seventy per cent of first-time homebuyers in Ontario expressed feeling worried their down payment would not be enough to get the home they wanted (60% in 2019) prior to purchasing their first property, compared to 75 per cent of respondents in Toronto (68% in 2019). Among the surveyed regions, Toronto respondents posted the highest level of anxiety in Canada.

“For many people, buying your first home lands on two important checklists: the biggest decisions you’ll make in your life, and the things that scare you the most,” said Tom Storey, real estate agent, Royal LePage Signature Realty. “Low interest rates mean the carrying cost of a mortgage is manageable for many young Canadians, but with inventory so low and rapid home price increases, there is a lot of competition in the market. This is adding an extra layer of anxiety to an already stressful process.”

Storey added that low borrowing costs and a softening in the Toronto condominium market did offer a rare opportunity for first-time buyers looking for a home in the city.

“Location is one of the most important factors a buyer considers when shopping for a home,” continued Storey. “Many of my first-time buyer clients are thinking long-term, about where and how they want to live in a post-pandemic world. For this reason, many will choose city living over the suburbs.”

According to the survey, 34 per cent of respondents in Toronto (34% in 2019) and 31 per cent in Ontario (30% in 2019) lived with parents or other relatives before buying their first home, surpassing the national average of 25 per cent (25% in 2019).

2021 Canadian First-time Homebuyer Survey Chart:rlp.ca/table_first-timehomebuyerssurvey