More than half of Ontarians believe they may never afford a home in their current city or town, according to new data from Right at Home Realty. The study conducted in mid-May also found 54 per cent of parents in the province are not planning on helping their children buy a future home.

Only 19 per cent of potential first-time homebuyers plan to purchase in the next two to three years, compared to 30 per cent in 2021, an overall decrease of 56 per cent year-over-year.

“The impact of rising mortgage rates has reduced the buying power of potential homebuyers. Additionally, the minimum mortgage stress test rate will climb to seven per cent or higher,” said John Lusink, President of Right at Home Realty.

“Another impact of the rising rates is the financial disincentive created for those thinking of selling but are now faced with much higher financing costs when considering buying their next home. While we will continue to see a drop in market activity, we do not anticipate this will lead to a market crash.”

Affordable housing concerns persist

The data found that 61 per cent of those in the GTA and 74 per cent of those in 416 regions believe they may never be able to afford a home in their current city or town. Additionally, more than half (54 per cent) of Ontarians said economic uncertainties are impacting their decision to buy a home and nearly half (45 per cent) reported that housing affordability challenges have led them to consider moving or buying a home in another city or town.

“The cost of house prices is an issue, especially amongst my millennial clients,” said Milli Pajpani, Sales Representative, Right at Home Realty. “Most millennials want a property – either to reside in or invest in – however, many do not have the savings to make those purchases happen because of the current prices.”

Younger buyers are more likely to feel the impact of rising interest rates

Interest rate changes have become more of a concern this year. This is reflected in the 12 per cent year-over-year decrease of respondents who said a mortgage rate increase would impact their decision to buy a home.

Nearly two-thirds of all respondents said a mortgage rate increase of 150 basis points (1.5 per cent) or less would have no impact on the decision to purchase a home, compared to 70 per cent in 2021.

Significant discrepancies were identified among different age brackets, with younger age groups being more impacted by mortgage rate increases. Two-fifths (41 per cent) of Ontarians aged 18 to 34 said mortgage rate increases would not impact their decision to buy a home, compared to 61 per cent and 76 per cent for those aged 35-54 and over the age of 55, respectively.

“News of rising mortgage rates may be a deterrent for some, however, those that take the time to do the calculations are often pleasantly surprised that the difference in the monthly payment is not as high as they would have expected,” said Christina O’Dea, Broker, Right at Home Realty.

Most homeowners are staying put

While 80 per cent of respondents cited they are not planning to sell their homes in the next two to three years, the reasons for those who are interested in selling vary. The top reasons include downsizing (33 per cent), moving out of the city (26 per cent) and taking advantage of the current market (23 per cent).

The number of homeowners stating they would sell their homes to take advantage of the current market has doubled since last year. This indicates a dramatic shift in the housing market, and only seven per cent of respondents who identified plans to sell in the next two to three years said it would be to upsize/buy a bigger house. In 2021, a substantial 39 per cent said upsizing is a reason for selling, reflecting a sizeable decrease of 82 per cent in this year alone.