Some market forecasts report home prices will remain relatively even in 2019, but that’s not enough to convince the majority of Canadians to buy a home this year.
According to a RBC’s annual home ownership poll, 56 per cent of Canadians think it’s better to wait until 2020 to become a homeowner, and 45 per cent said they’d be willing to push off their purchase for an additional two years. The reason? Many believe house prices will drop (54 per cent), and others are uncertain about the economy (47 per cent).
The results of the national survey, which included more than 2,200 Canadians over the age of 18, correlates with what’s happening in the market. In Canada’s biggest cities, home sales are on the decline. In March, Toronto sales fell flat, while Vancouver sales dropped 31.4 per cent year-over-year, reaching the lowest number of sales in 33 years.
But there are other factors that are also deterring Canadians from entering the market, on top of the ones identified by the RBC survey. The stress test, for instance, is making it more difficult for prospective first-time home buyers to qualify for a mortgage, interest rates are continually on the rise, and many Canadians are still struggling with debt.
In regards to the latter issue, the RBC poll found that two in five Canadians are “house poor.” This term refers to when people spend a sizable amount of their income (usually 30 to 40 per cent) on home ownership.
As a result of this reality, over half (51 per cent) of Canadians surveyed said they did not want to put themselves in the position of being house poor. This could be another reason for putting off buying a home in the next year, as the poll found that nearly half of prospective home buyers (47 per cent) plan to put more than 15 per cent towards their down payment.
“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,” Nicole Wells, RBC’s vice president of home equity financing, said in a news release.
The face of home buyers is also changing, according to the survey. More people are buying homes on their own (32 per cent) or with the help of family (28 per cent) rather than with their partner or spouse.
Additionally, rising interest rates are the biggest concern for those who plan to become first-time home buyers in the next two years.