Canadians still believe homeownership is still a good investment, but are hesitant to take the leap, according to RBC’s 2017 Home Ownership Poll. Behind the decision to delay their purchases respondents cited lack of affordability, belief that home prices might come down, and economic unpredictability.
The key findings of the poll include:
- 32% of Canadians plan on buying a home in the next two years, up 7% compared to last year’s poll.
- Millennials (ages 18-34) express the highest home-buying intention (50%).
- Resurgence in the economy and employment rate has boosted home-buying intentions.
- The average homeowner spent 5 weeks searching online for their current home online.
- Just over a third (35%) of Canadians have received – or plan on receiving -financial assistance from their families for a down payment. An near-equal proportion (36%) plan to purchase a home on their own with a dedicated savings account.
More than half of Canadians were impacted by stress test
Four-in-10 (39%) Canadians are aware of OSFI’s latest Stress Test Guidelines for uninsured mortgage and 55% of respondents claimed the new regulations had impacted their purchase decisions.
- 25% planned on making a higher downpayment
- 19% had delayed their home purchase
- 18% planned on buying a smaller home, or one in a more affordable location
One third of Canadians receive financial help from their families
Just over a third (35%) of Canadians indicated they would be receiving, or had already received, a monetary gift from their families to assist with the downpayment. 36% planned on completing the purchase on their own, with a dedicated savings account.
With the right tools and a detailed roadmap that navigates the journey, Canadians are better prepared to make one of the biggest decisions.
Nicole Wells, Vice-President of Home Equity Financing at RBC writes: “Canadians continue to feel optimistic about getting into the housing market despite changes in government regulations. They’re taking a more informed journey to home ownership by starting with affordability. With the right tools and a detailed roadmap that navigates the journey, Canadians are better prepared to make one of the biggest decisions – and it’s based on facts, not emotions.”
Consumer confidence is high amongst millennials
Millennials (age 18-34) are feeling more confident about the economy, employment rates and home purchase intentions.
- 84% responded that real estate was a “very good or good investment”
- 36% of millennials are less anxious about employment this year (vs. 47% in 2017).
- 19% are less anxious about the economy (compared to 28% in 2017).
- Millennials also reported an increased likelihood of 11% to buy a home within two years.
The path to finding a dream home starts online
RBC’s poll also looked at home-buying challenges. The respondents cited the following as their top two challenges:
- Finding the right property: 32% claimed this was the top obstacle.
- Determining their budget: 21% claimed that deciding how much they could afford was their biggest challenge.
The average homeowner polled claimed that they had spent 5 weeks searching for their current home online. Online searches are the most common route to homeownership – in fact, one in ten millennials said they would purchase a home without physically visiting the property.
49% of Canadians reportedly value “virtual visits:” being able to look at photos and videos of prospective homes online.
Interest rates are a concern
61% of Canadians reported high or moderate concern about interest rate increases – 10% more than last year’s respondents. Over a third (32%) of respondents reported a sense of urgency in buying their home before an interest rate hike. Another third (35%) were considering buying a home sooner rather than later, due to current low rates.
Tips for home-buying success
RBC Royal Bank® also offered the following tips for prospective home buyers.
Scenario planning: Factor in employment, family and travel plans when evaluating your decision to buy a home. Make sure you lay out all potential scenarios, holding them up against your home-buying aspirations.
Do your own stress test: Start by using an affordability calculator to determine the recurring costs of homeownership. Compare your projected monthly expenses with your your current and expected income. Ideally, housing costs should not exceed 33% of your net income.
Use online tools and resources: Homebuyers today are equipped to make more informed decisions compared to past generations. From online mortgage pre-approvals to comparative market analyses, important information is right at your fingertips before your house hunt even begins.
Make use of experts: Your home is likely to be the biggest financial investment you make in your lifetime. Your investment decision could impact your retirement plan, or your ability to afford key expenses such as your children’s education. Keeping this in mind, it is important to meet with financial experts – be it real estate brokers, financial planners or mortgage specialists – to get a better idea of how to invest wisely and avoid risk when making a real estate purchase.
A Note on Methodology
These are some of the findings of the annual RBC Home Ownership Poll conducted by Ipsos from January 9 – January 24, 2018 on behalf of Royal Bank of Canada, through a national survey of 2,000 Canadians ages 18+ who completed their surveys online. Quota sampling and weighting are employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
SOURCE: RBC Royal Bank
This article, RBC Poll: How Do Young Canadians Feel About Real Estate Investments? appeared first on Shupilov News