According to a recent survey conducted by Ipsos for the Royal Bank of Canada (RBC), 32% of Canadians are likely to buy a home within the next two years. This percentage is 7 points higher than last year and the increase is thanks to millennials.
The survey found that 50% of millennials are likely to buy a home in the next two years, which is a year-over-year increase of 11 points. It’s clear that young buyers aged 18-34 are becoming more confident in their ability to buy a home because only 36% of millennials are uncertain about the economy (down 11 points from last year), and just 19% experience anxiety about their jobs (down 9 points from 2017).
While 43% of Canadians think it makes more sense to wait until 2019 to buy a home, 84% feel that buying a home is a good investment. When it comes to just millennials, the investment belief is the same at 84%.
A significant factor that everyone’s talking about this year is the new stress test for uninsured mortgages. 50% of Canadians say the stress test is impacting their decision to buy; 25% plan to make a larger down payment; 19% are delaying their purchase; 18% plan to buy a smaller home; and 18% are looking to change location in search of a more affordable home.
Interest rate increases are also on the minds of Canadians. 61% are concerned about an interest rate increase in the coming year. 35% say they’re considering buying now because of low rates and 32% plan to buy now out of fear that rates may go up in the near future.
When it comes to the top challenges of finding a home to buy, 32% say finding the right property is the most difficult and 21% say affordability is the most challenging.
A whopping 65% of Canadians begin their new home search online and spend an average of five weeks conducting online research. Though much of the research is done online, 96% need to see the home before purchasing. This means only 4% of Canadians would buy a home without seeing it; this number jumps to 9% among millennials.
To support a home search, 49% of buyers prefer if some sort of visualization is available, such as photos, videos, 3D walkthroughs, and/or floor plans. 39% would like to know home valuations in the neighbourhood and 36% would like the use of an affordability calculator.
When the time comes to make a down payment, Canadians are taking a variety of routes. 36% have a savings account set up for a down payment; 36% are relying on family support; 26% are depending on the sale of their current property; 22% have tax-free savings accounts; 18% plan to access their RRSPs; 19% are using inheritance; 17% are depending on receiving higher paid work; and 16% will take on additional work.
The Greater Toronto Area’s (GTA) housing market is calming compared to record highs reported during the same period last year. It’s definitely a positive thing that more Canadians feel like they can purchase a home within the next two years, and even better that millennials are confident in the housing market!