Majority of Canada's first-time homebuyers worried they can't afford down payment
If you’re a first-time homebuyer but aren’t sure you have enough money to afford a down payment on your dream house, you’re not alone.
According to Royal LePage’s 2023 first-time homebuyer survey, prospective homeowners in Canada are increasingly worried they’ll miss out on a home due to financial constraints.
The survey, conducted by Environics Research and released on Thursday, analyzed key trends among first-time homebuyers who bought a property within the last two years.
One of the key findings from the report is that 67% of first-time homebuyers said that before buying, they worried they might miss out on the home they really wanted because of an insufficient down payment.
That’s a 10% increase compared to the same survey question in 2019 (57%).
When the same question was asked to those who intend to buy their first home in the next two years, 63% reported feeling worried that they will miss out due to an insufficient down payment.
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“Canadians continue to face challenges in entering the real estate market, be it high interest rates, strict mortgage qualification standards, or difficulty saving enough money in a reasonable time period for a down payment,” said Phil Soper, president and CEO of Royal LePage, in a statement.
“That first transaction is the most difficult, and in today’s environment, first-time buyers are faced with large price tags, high carrying costs and the added challenge of qualifying for lending at higher rates due to the stress test.”
According to the survey, that feeling has spread across the country in Canada’s major cities.
In the Greater Toronto Area, 74% of first-time homebuyers reported feeling anxious that they might miss out on buying their dream home because they can’t afford a down payment.
In Vancouver, 71% of Canadians feel the same way, a 2% jump from survey results in 2021 (69%).
Sixty-seven per cent of Montrealers also feel similarly, and in Calgary, 69% of first-time homebuyers expressed their worry.
Despite this, Soper said Canadians persist in their goals towards homeownership.
“Still, they continue to prioritize homeownership and view it as a milestone worth achieving,” he said. “With household savings still sitting above historical norms, due to accumulation during pandemic lockdowns, many Canadians will have a leg-up on their down payment when they are ready to enter the market.ā
However, due to the current state of the housing market, the Royal LePage survey found that 34% of first-time homebuyers across Canada purchased a home in a more affordable neighbourhood or region than they had initially planned.
Thirty-two per cent of survey respondents said they purchased a smaller home, and 11% said they had to seek financial assistance from family or friends.
“While there may not be one direct path to homeownership that all first-time buyers take, many are willing to accept support and make concessions on their wish list in order to transact,” said Soper.
“That may mean opting for a property in a more affordable area or with fewer bells and whistles. The goal is getting into the market and starting to build equity, not necessarily landing your dream home on the first try.”
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