January 22, 2013
Kelowna, BC (January 22, 2013) -- Changing market conditions have triggered a shift in the Canadian homebuyer mix and mindset, a fact identified and confirmed by the RE/MAX Canadian Homebuying Trends Survey 2013-2014 released today.
The national survey, hosted on the Angus Reid Forum in December, was conducted among 1,109 prospective purchasers who intend to buy within the next 24 months. From consumer demographics to buyer intentions, the survey provides a snapshot of Canadian homebuyers heading into a period of moderation. Among the key findings:
“Today’s real estate consumer is more experienced and financially prudent than in the past,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Recent global events—in concert with new mortgage finance rules—have fuelled a more conservative mindset that will serve Canadians well moving forward. It seems the lessons of excess are being heeded.”
Second-time and multi-time buyers represent 70 per cent of those serious about making a move—a trend that emerged in the latter half of 2012 and is expected to continue over the next two-year period. First-time buyers will continue to play a role in the market—at 30 per cent— but this cohort’s more experienced counterparts will lead the charge for housing over the next 24 months.
“Between 2009 and 2011, first-time buyers were the engine driving housing activity, taking advantage of favourable conditions and a recovering economy,” says Ash. “That changed in 2012, and even earlier in B.C., as prices reached a breaking point. While equity-rich homeowners will be the driving force going forward nationally, we could see a resurgence of first-time buyers in British Columbia, as they take advantage of softer pricing.”
Spending patterns were conservative for the most part. Thirty-eight per cent of purchasers indicated they would spend under $250,000 on their home, while 42 per cent would spend between $250,000 and $500,000, 10 per cent would spend between $500,000 and $1 million and one per cent intended to spend over $1 million. The singles cohort was most prudent, with 47 per cent of purchasers intending to spend under $250,000. Of the buyers spending $500,000 to $1 million, almost half resided in Ontario, while the remaining 50 per cent were almost evenly divided between British Columbia and Alberta.
Although 37 per cent of purchasers who own homes are expected to spend more than the value of their current properties, 23 per cent indicated that they would spend an equivalent amount on the next buy. Forty per cent intended to spend less on their new home, with four out of 10 of those respondents over age 55.
“Serious equity gains have bolstered the level of downpayment homeowners can put forth,” says Ash. “As a result, they’re clearly in a stronger financial position. They’re also more cautious, as demonstrated by our survey findings. Many are downsizing or making lateral moves. A redefined mindset has the market looking solid through 2013-2014.”
Despite all the dire warnings coming from the central bank and other sources, one of the most surprising findings of the survey was the fiscal responsibility of Canada’s young homebuyers. Four out of 10 (40 per cent) purchasers between the ages of 18 - 34 intended to put down 20 per cent or more on their home.
Not surprisingly, of those putting down 30 per cent or more, 45 per cent were aged 55 and over. Just seven per cent of purchasers had a downpayment of five per cent, while 14 per cent indicated that they were putting down 10 per cent.
The financials of those purchasers intending to buy a home were relatively sound, with 40 per cent earning between $50,000 and $99,999. Twenty-four per cent earn $100,000 plus.
“Canadians remain confident in the future of housing—and this was demonstrated nationally across
all demographics—regardless of income, gender, age, or location,” says Ash. “The level of enthusiasm bodes well, as a substantial barometer of market health. The outlook is positive.”
Overall, 48 per cent of those surveyed believed housing values in their area would rise in the next 12 months and 35 per cent believed housing values would remain the same. Ten per cent believed housing values would decline. Purchasers were
most bullish in Ontario, where 85 per cent indicated prices would remain the same or rise, and least bullish in British Columbia where 71 per cent believed values would climb or remain the same. Twenty-four percent of British Columbia purchasers believed that values would drop in the next 12 months, while just seven per cent in neighbouring Alberta thought this would come to fruition.
Low vacancy rates and higher rental costs, combined with favourable interest rates, are the primary impetus for those currently renting accommodations, and ultimately, behind their decision to buy a home. At present, 29 per cent of those surveyed rent, while 68 per cent owned their own property.
Of those purchasing in the next 24 months, 18 per cent are single, 43 per cent are couples, and families account for 33 per cent. Almost half of single purchasers (45 per cent) are female—confirming suspicions that women now represent a considerable force in the market. According to Statistics Canada, the number of women with post-secondary school diplomas/degrees has increased steadily. In 2011, 72 per cent of women aged 25 to 44 had completed post-secondary education, as opposed to 65 per cent of men. Income and employment rates among women have also been on the rise.
“Our REALTORS® have definitely seen an upswing in the number of female homebuyers active in the market in recent years—and the survey confirms those anecdotal accounts,” says Ash. “In fact, according to Statistics Canada, homeownership rates for both men and women living alone have climbed approximately four per cent respectively during the 2001 to 2006 census period. With established careers and financial independence, successful, young professionals are making their mark.”
While the 18-34 cohort represents 37 per cent of buyers, the 35-54 grouping is by far the largest at 40 per cent. The 55-plus
category trails, representing just 23 per cent of homebuyers. The greatest percentage of younger buyers can be found in Alberta, where they represent 40 per cent of the purchasing pool. Job opportunities abound and salaries are generous as a result of a robust economy, and housing is still relatively affordable in the province. The oldest buyers are found in Quebec, where they represent 29 per cent of all purchasers—many of whom may be taking advantage of serious equity gains realized over the past decade.
The vast majority of purchasers continue to seek out single-detached homes (53 per cent), while condominiums ranked second at 17 per cent, followed by both semi-detached/duplex and townhouse/rowhouse each at 11 per cent. Affordability has factored into the equation, especially in larger centres. Five per cent of purchasers indicated that they were interested in recreational
properties, which bodes well for Canada’s recreational property market moving forward. Properties outside of Canada
are represented as well, but to a lesser extent at two per cent. This may be indicative of a cooling trend, as rising prices and fewer opportunities south of the border discourage Canadian buyers. Commercial properties also made the list, representing one per cent.
Lifestyle and investment were the principle drivers in the decision to purchase a home. Buyers, for the most part, were interested in larger properties (17 per cent), updated homes (six per cent), and different neighbourhoods (11 per cent), while others were intent to downsize to smaller accommodations (14 per cent). Inheritance (two per cent) was as a factor in a nominal number of instances.
The breakdown in terms of location was tight nationally, with 35 per cent of buyers going urban and 32 per cent going suburban. Only 16 per cent said that they would go rural. Almost half of purchasers aged 18 - 34 indicated that they were going urban. Alberta has the largest component of urban-bound purchasers at 50 per cent, followed by 38 per cent in Ontario. The suburbs were a major draw in British Columbia (39 per cent) and Quebec (36 per cent), where purchasers were able to get more bang for their buck.
The Canadian Homebuying Trends Survey was conducted online from December 5th to December 10th, 2012, among a sample of 1,109 Canadians that are looking to buy a residence in the next 24 months, who are Angus Reid Forum panel members. The
results have been statistically weighted to ensure a representative sample. The margin of error on the full base — which measures sampling variability — of 2013 respondents is +/- 2.2%.Discrepancies in or between totals are due to rounding.