In a fiercely competitive housing market where prices continue to skyrocket, many Canadian buyers increasingly believe that their dreams of home ownership are unattainable.
A Spring Housing Poll published today by RBC found that a large percentage of non-homeowners feel that they are unlikely to make the leap into the housing market. Of the 2,000 Canadians surveyed, about 36 percent of non-homeowner participants under the age of 40 said they believe they will never own a home.
The highest percentage of those surveyed who have “given up on the dream of home ownership” are located in regions with the hottest housing markets — 41 percent of respondents reside in Western Canada while 39 percent live in Ontario, according to the poll.
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Similarly, 62 percent of all Canadians surveyed believe that the majority of people will be priced out of the market in the next decade. Seventy-one percent of both Ontario and BC respondents, and 65 percent of those polled from Alberta, “strongly” or “somewhat agree” with that statement.
RBC found that, although the pandemic has caused some prospective buyers to push off their plans, many have been able to boost their savings toward a home purchase. Forty-four percent of respondents said that they’ve been able to save more over the past year, and 60 percent of those who plan to buy within the next two years have been saving monthly.
In February 2021, the average price of a home in Canada was reported to be $678,091, according to the Canadian Real Estate Association (CREA). However, 48 percent of the poll’s respondents who plan to buy in the next two years said that their budget is less than $500,000. Nine-in-10 of those who plan to buy in that time period have an average of $42,000 saved for their purchase.
“Building up a down payment can often be the biggest barrier to buying a home, especially as prices continue to climb in the pandemic environment,” said Amit Sahasrabudhe, RBC’s Vice-President of Home Equity Financing, Products and Acquisitions, in the report.
“While everyone’s financial situation is different, many Canadians have been taking advantage of reduced spending over the year to build up their savings and get closer to making their dream of owning a home a reality,” he added.
Despite the obstacles some non-homeowners may have, the intention to buy real estate among Canadians has been growing. Within the next two years, 30 percent of those polled said that they intend to purchase, which is an eight percent increase from 2020. For Canadians under 40 and new arrivals that have lived in the country less than five years, this sentiment is stronger with 49 percent and 66 percent of respondents, respectively, reporting that they want to buy within a two-year period.
Record-low interest rates (41 percent) and the potential for home prices to rise in the immediate future (61 percent) were some of the motivating factors among Canadians who aren’t waiting to purchase. On the flip side, uncertainty about the economy and the hope that prices will come down are the reason 56 percent and 41 percent of potential buyers, respectively, are now holding off.
“Historically low mortgage rates and continued economic uncertainty have created a lot of unknowns for home buyers,” said Sahasrabudhe in the report. “As we continue into year two of the pandemic, knowing how much flexibility you have in your finances has never been more important.”