It’s no secret that COVID-19 has had an unprecedented impact on the economy and the wellbeing of Canadians. But as the country continues to rebuild, it’s becoming clear that the pandemic has re-shaped the needs of consumers — particularly first-time homebuyers.
In a new Housing Survey from BMO Bank of Montreal, while COVID is still affecting the experience and expectations for first-time homebuyers, many continue to have a positive short-term outlook on the housing market, with many still believing it’s a good time to buy.
However, while the survey shows that Canadians are now more optimistic about the housing market, it also revealed that the behaviours of first-time homebuyers are skewed differently across the country.
The survey, conducted by Pollara Strategic Insights, found that when it comes to spending, on average, first-time homebuyers are looking to spend roughly $432,000 on their first home and more than 40% indicate that now is a good time to buy.
Buyers in Alberta and the Prairies are currently the most optimistic about their housing markets with 60% feeling that it is a good time to purchase a home. The most pessimistic buyers, on the other hand, live in Ontario and British Columbia, with only 33% of first-time buyers showing optimism about their markets.
The pandemic has also influenced where and what types of home Canadians want to buy, with 29% of first-time homebuyers searching outside of the city and turning to the suburbs or more rural areas. What’s more, with working from home becoming more prevalent, a quarter of prospective buyers are moving their searches away from a condo or townhome, to a detached home with more space.
Finally, the survey revealed that the size of the mortgage first-time buyers are looking to take has also been influenced by COVID. About half of buyers have had to tap into their down payments to help cover unexpected costs over the last several months, while a quarter of first-time homebuyers have said that they will have to take a larger mortgage.
Regionally, buyers in Ontario and British Columbia are the most likely to opt for larger mortgages — 30 and 26%, respectively.
“Even with a global pandemic as our backdrop, we’re encouraged to see Canadians maintaining their optimism on our housing market,” Hassan Pirnia, Head of Personal Lending and Home Financing Products at BMO, said in a statement.
“While many buyers are viewing the market favourably, households are facing stronger headwinds than they have in the recent past. As buyers look to enter the market, we should expect to see a continued trend where they are exploring different financial options to help with the purchase.”