Saving for down payment giving most first-time Toronto homebuyers anxiety

May 14 2021, 9:15 am

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.”

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.”

Laura HanrahanLaura Hanrahan

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