Despite stratospheric prices in the country’s largest housing markets, a majority of Canadians still see the value in owning a home compared to renting.
That’s one of the findings in RBC’s annual Home Ownership poll, which revealed 66% of Canadians believe it makes more sense to buy vs. rent.
Despite prices falling over the past year, homes are still significantly more expensive in many markets compared to a several years ago. The issue of affordability means that buying a home and living “house poor” is the reality for one in four (25%) of Canadians, the poll found.
It noted “house poor” refers to those who overextend themselves and end up spending 30-40% or more of their income on home ownership and related expenses.
“While nearly all Canadians (92%) admit that mental stress is a potential impact of being house poor, almost half (47%) say it’s worth the sacrifice,” reads the report.
Given the shifting conditions in the real estate market, 56% of respondents said it would be better to hold off on a house purchase until next year. Of those, 45% said they would be willing up to wait two years to make their purchase—or 55% of 18- to 34-year-olds—since a majority (54%) believe house prices will continue to fall.
Those in B.C. (68%) and Ontario (58%) were most likely to expect a continuing decline in prices.
Changing Homebuying Dynamics
For the first time in five years, more Canadians now see the real estate market as being balanced between buyers and sellers.
The survey also revealed how buyers have adapted to changing market conditions, such as higher prices and more stringent mortgage rules.
For example, almost as many homebuyers are relying on help from family (28%) as those who buy on their own (32%).
“We’re seeing a fundamental contrast in who’s at the buying table,” said Nicole Wells, Vice-President, Home Equity Financing, RBC. “There is a surge in confident, in-control solo homebuyers and, on the polar opposite end, those who are saying they can’t do it alone and need the assistance of family.”
More About Today’s Homebuyers
Here are some of the other key findings from the survey:
- Down payments are trending upwards, with 47% of prospective buyers planning to put down more than 15% (up 10 percentage points from 2018)
- Canadians are well-prepared to weather a potential downturn in house prices (71%) or increase in interest rates (63%)
- The top factors in choosing a home are affordability (21%) and a safe neighbourhood (20%)
- First-time buyers who plan to purchase in the next two years are most concerned about future interest rate increases (74%) vs. 59% of all Canadians
- 80% of Canadians say a home or condo purchase is a good investment