Rising interest rates and inflation have had a modest impact on the decisions of recent first-time homebuyers. In a survey from private residential mortgage insurer Sagen, 26 per cent said economic conditions have had no impact on their ability to afford their homes, while 52 per cent said despite challenges they wouldn’t have changed their home-buying decision.
Current conditions have led 43 per cent of future buyers to delay the timing of when they buy, while 35 per cent said conditions have not impacted when they will buy their homes.
Housing availability is lacking, though, as the majority of respondents are noticing the insufficiency. Only 13 per cent believe it’s a good time to buy.
Yet market confidence is far greater, with many purchasing or planning on buying a smaller home than expected or within a less expensive neighbourhood.
Fewer buyers in 2023 report not having to delay or suspend their mortgage payments compared to those in 2021. More than a third are buying with financial support from family and a quarter are receiving help with mortgage payments.
“These results show Canadian first-time buyers have been, and are entering the market eyes wide open, mindful of what they can afford, the trade-offs they need to make, and their own desire to achieve the dream of home ownership” says Stuart Levings, president and CEO of Sagen.
“Rising interest rates have cooled home prices in many regions of the country, leaving potential sellers waiting on the sidelines for conditions to return to normal. This has made it more difficult in the short-run for prospective buyers to find the homes they want, but longer term they remain confident in their decisions to become homeowners.”
Greater importance placed on work and home proximity
The impact of the hybrid work environment is also reflected in the survey results. First time homebuyers and intenders both place greater importance on the proximity of their homes to where they work than they did in 2021.
They are also placing much greater importance on having space where they or their partners could work from home. Interest in energy efficient homes is also trending higher.
An estimated 24 per cent of both first-time and hopeful buyers are choosing condos more readily since before COVID-19, with fewer seeking detached homes.
“First-time homebuyers are expecting that the hybrid work model is here to stay” says Levings. “They are compromising on space so they can find an affordable home that is closer to work for when they need to be in-person, yet they also want room to work from home when they are able to.”
The findings suggest that property developers, notably condo builders, will need to take these new considerations into mind as they design homes that will adapt to current and future needs.
