More Canadians are taking a non-traditional
approach to buying a home
Many say being house poor may be the
reality of home ownership
- For the first time in five years, Canadians see the real
estate market as balanced between a buyers' (36%) and sellers'
(34%) market
- Almost as many home buyers are leaning on family for help
(28%) as those buying solo (32%)
- One-in-four Canadians (25%) currently identify as being
'house poor'
- Down payments are trending up with 47 per cent of
prospective home buyers planning to put down more than 15 per
cent
TORONTO, April 8, 2019 /CNW/ - For the first time in
five years, it's no longer a sellers' market, with Canadians
reporting the housing market as balanced between buyers and
sellers. The make-up of home buyers has also seen a distinct change
from the more traditional trend of buying with a partner/spouse.
Today, almost as many home buyers reveal they need help and are
purchasing or planning to purchase with their family (28%), as
those who say they can purchase solo (32%), according to the annual
RBC Home Ownership Poll.
In fact, when compared to past years, buying a home with a
partner or spouse has been steadily declining (42% versus 49% in
2017), while non-traditional trends, like purchasing a home alone
(32% versus 29% in 2017), are climbing.
"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 home buyers and, on the polar opposite
end, those who are saying they can't do it alone and need the
assistance of family."
As Canadians battle with affordability, buying a home and living
'house poor' is or has been a reality for four in 10 Canadians
(39%). Conversely, over half (51%) say they would not put
themselves in the position of being house poor. House poor refers
to Canadians who overextend themselves and spend an unusually large
proportion of their total income (roughly 30-40% or more) on home
ownership, including mortgage payments, property taxes, maintenance
and utilities. 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.
"While many Canadians tell us that house poor may be a reality,
it doesn't have to be. It may require more effort or time upfront,
but being more prepared in the home-buying journey can help bring
it all together," says Wells. "Let's face it, the white picket
fence or pride of your name on the deed is a rite of passage and
doing it responsibly means there's still money for the extras in
life."
Even with shifting conditions in the real estate market, 56 per
cent of Canadians think it's better to wait until next year to
purchase a home, with affordability at the forefront of this trend.
Almost half (45%) of Canadians who said they would wait until next
year to purchase a home, are prepared to push the purchase out two
years or more (highest among 18-34 year olds, 55%). Of those
waiting to buy, 54 per cent have the expectation that house
prices will come down (as high as 68% of British Columbians and 58%
of Ontarians expect the price of housing to drop) and 47 per cent
of Canadians cite uncertainty about the economy as the main reason
for waiting.
Canadians remain confident and know what they want
- Eight-in-10 Canadians say a home or condominium purchase is
still a good investment (81%).
- Canadians feel it makes more sense to buy than rent (66%).
- Canadians are well positioned to weather a potential downturn
in housing prices (71%) or an increase in interest rates
(63%).
- Affordability (21%) and being in a safe neighbourhood (20%) top
the list of what Canadians must have, while buying in 'the right'
neighbourhood is less of a concern (6%, steady decline since
2015).
- Canadians are most willing to sacrifice the conveniences of
being close to a major highway (16%), dining and entertainment
(13%), good schools (11%) and public transit (10%).
Interest rates and Stress Test Guidelines continue to impact
buyers
- Almost half of prospective home buyers (47%) say they plan to
put more than 15 per cent down (up 10 percentage points from 2018)
and less than one-in-five (16%) say they will put down only five
per cent of the purchase price.
- First-time homebuyers – Canadians who anticipate purchasing
their first home in the next two years – are most concerned about
potential interest rate increases (74%, compared to 59% for all
Canadians).
- More than half of first-time homebuyers (56%) say they may
actually buy sooner because of where interest rates are now and
concerns of further hikes.
Tips for success when buying a home:
Get expert advice, in person: Buying a home is one of the
biggest decisions and purchases you will make in your lifetime, and
for some, potentially several times over. Emotions come into play
when the stakes are this high and while modern society tends to
gravitate to all things digital, in-person interaction throughout
the home-buying journey is essential.
"Having someone on the other end of the phone or sitting across
the table to provide expert advice in real-time promotes overall
knowledge and confidence in the home buying process. Mortgage
specialists can assist in setting realistic expectations to
determine how purchasing a home fits with both your short- and
long-term financial goals. It's a real-life conversation for a
big-life transaction," commented Wells.
With the RBC Mortgage Specialist Locator you can find
an RBC Mortgage Specialist near you for no-obligation
professional advice, personalized service, and fast and easy
mortgage pre-approval1.
Do your research: Online tools can get your home buying
journey off to a great start by providing information and insights
that can inform your decision-making research.
- RBC is redefining the home search with OJO, a digital real
estate assistant that uses Artificial Intelligence (AI) learnings
and image recognition software to learn about a buyer's unique
preferences – beyond the number of bedrooms and bathrooms.
Currently available in the Greater
Toronto Area, OJO does the heavy lifting by distilling the
buyers' preferences and needs, and packaging it into tangible data
they can share with their agent.
- RBC's Neighbourhood Explorer can help you quickly narrow
down your search to find the best areas to live that are most
suited to your lifestyle.
- In only a few easy steps, RBC's True House
Affordability tool shows you how much you can afford and helps
you get pre-qualified1 for a mortgage instantly.
- The RBC Home Buyers Advantage is a one-stop resource
organized into five stages of the home-buying journey: dream, shop,
buy, move and live. This step-by-step guide provides access to
educational information, RBC tools and calculators and discounts
from retail and service providers to effortlessly guide you through
and improve the home-buying experience at all stages.
Think beyond face value: Mortgage rate and house price
are just the tip of the iceberg. Everyone's financial situation is
unique and having a full understanding of your finances, and how
they may change in the future, is critical to avoid taking on more
debt than you can handle.
About the annual RBC Home Ownership Poll
These are
some of the findings of the annual RBC Home Ownership Poll
conducted by Ipsos from January 9 –
January 21 and February 14 – 15, 2019 on behalf of Royal Bank of
Canada, through a national survey
of 2,223 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
Canadian 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 confidence 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
confidence interval is 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.
About RBC
Royal Bank of Canada is a global financial institution with
a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 84,000+ employees who bring
our vision, values and strategy to life so we can help our clients
thrive and communities prosper. As Canada's biggest bank, and one of the largest
in the world based on market capitalization, we have a diversified
business model with a focus on innovation and providing exceptional
experiences to our 16 million clients in Canada, the U.S. and 33 other countries. Learn
more at rbc.com.
We are proud to support a broad range of community initiatives
through donations, community investments and employee volunteer
activities. See how at rbc.com/community-sustainability.
1 The True House Affordability Tool gives you an
estimate of the amount of mortgage you may qualify for with us
based on the accuracy and completeness of the information provided
by you, is for illustrative and general information purposes only
and is not intended to provide specific financial or other advice.
You should not waive any financing condition based on the results
of the True House Affordability Tool. This is not a mortgage
approval or pre-approval. You must submit a separate application
for a mortgage approval or a mortgage pre-approval and a full
credit report.
SOURCE RBC