Skyrocketing Toronto home prices mean an even larger down payment is needed to get into the market, which is giving an overwhelming majority of first-time homebuyers anxiety, according to a new report.
Royal LePage released the results of its 2021 Canadian First-time Homebuyer Survey, revealing that a whopping 75% of first-time buyers in Toronto reported worrying that they would miss out on buying a home because they didn’t have enough of a down payment saved.
“It’s not at all surprising that first-time homebuyers are experiencing anxiety about the size of their down payment,” said Phil Soper, president and CEO of Royal LePage. “Buying a home, especially your first home, is one of the biggest and most important financial investments a person will ever make.”
Historically low interest rates made buying a home more feasible for many first-time buyers. But fierce competition and a low number of homes on the market have driven up prices to new highs, edging many would-be buyers out of the market.
“Low interest rates mean the carrying cost of a mortgage is manageable for many young Canadians, but with inventory so low and rapid home price increases, there is a lot of competition in the market,” said Royal LePage Signature Realty agent Tom Storey. “This is adding an extra layer of anxiety to an already stressful process.”
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Toronto also had the highest proportion of respondents — 34% — who lived with parents or other relatives before buying their first home. This is higher than the national average of 25% and higher than Vancouver (31%) and Montreal (21%).
Despite there being a soaring interest in suburban homes with more space during the pandemic, Storey says that many first-time buyers are still interested in Toronto condos.
“Location is one of the most important factors a buyer considers when shopping for a home,” Storey said. “Many of my first-time buyer clients are thinking long-term about where and how they want to live in a post-pandemic world. For this reason, many will choose city living over the suburbs.”