Genworth Canada’s 2019 First-Time Homeownership Study provides a snapshot of the demographics of Canada’s first-time homebuyers (FTBs), what’s motivating them and what they’re buying. The study surveyed more than 1,800 Canadians aged 25-40 who purchased their first home within the previous two years.
1. First-time homebuyers are pragmatic millennials.
There’s no denying that millennials play a huge role in the FTB space. The proportion of millennials who own a home, whether bought recently or previously, has increased from 55 per cent in 2015 to 60 per cent in 2019. The homeownership rate of all Canadians is 68 per cent, according to the 2016 Census. However, the proportion of those aged 25-40 who own a home has declined from 71 to 62 per cent over the same period.
2. Newcomers represent an important and growing segment of the first-time homebuyer space.
Twenty-five per cent of first-time buyers were immigrants, an increase from 19 per cent in 2017. The proportion of immigrants is even higher when looking at major urban pockets such as Vancouver and Toronto, where immigrants represented 43 per cent and 42 per cent of FTB respectively. In 2019, 15 per cent of FTB were newcomers who immigrated within the past 10 years.
3. Top motivators for buying are based on financial decisions.
The study reveals top motivators that impacted the buying decision of FTB include a strong belief that owning a home is a wiser financial decision (50 per cent) and wanting to own the home so they are in control of their investments (45 per cent). Other top motivators include saving enough for a down payment (44 per cent) and feeling financially confident that they can afford it (42 per cent).
4. First-time buyers are more financially savvy.
When it comes to their financial fitness, FTBs continue to significantly outperform the general population and the gap is widening.
The study showed that 76 per cent of FTBs have a long-term financial plan for retirement compared to 58 per cent of the general population, while 83 per cent have confidence in their long-term financial health compared to 61 per cent of the general population.
5. Most first-time homebuyers are driven by price.
Affordability is a key concern of today’s FTB. Price is the No. 1 consideration (95 per cent), even trumping square footage (90 per cent).
6. More buyers are considering their commute over house characteristics.
Forty-eight per cent of first-time buyers show preference towards homes that are closer to work, compared to 32 per cent who preferred a less expensive home with a longer commute.
7. Condominium purchases are growing.
The study reveals a growing share of condos being purchased by FTBs – 21 per cent, a five-per-cent jump compared to the 2017 study. New homebuyers with high-ratio mortgages are more likely to have bought a fully detached home (52 per cent). FTBs who bought into the condo market are more likely to have put a down payment of 20 per cent or more, purchased on their own and plan on staying in their current home for less than five years.
8. Most first-time homebuyers are doing their research.
A solid majority of FTBs say they got pre-approved for a mortgage before shopping for homes. The national average of FTBs who obtained a pre-approval before house shopping was 58 per cent, compared to 27 per cent who did so after finding the home, and 13 per cent who sought a pre-approval after negotiating the price of the home. These numbers do vary slightly by region. For example, FTBs in Toronto are more likely (18 per cent) than the national average to seek mortgage approval after negotiating the price of their home.
9. Down payment sources from gifts/loans are on the rise.
The study says 37 per cent of FTBs received a gift or loan from the Bank of Mom & Dad, up significantly from 32 per cent in the 2017 study. Half of those who received a gift or loan say that without it they would have delayed buying a home in order to save for a larger down payment, whereas 32 per cent would have purchased with a smaller down payment and 15 per cent would have sought a lower priced home.
10. Half of first-time buyers have financial fitness that is looking good or looking great.
Overall, the majority of first-time buyers across Canada feel financially confident after purchasing their first home. Forty-nine per cent of new homebuyers felt they were looking good or great after making the purchase, compared to 37 per cent in the general population who felt the same.
The survey results continue to show that FTBs are well educated, employed and gaining in household income year over year. This, together with stronger financial fitness and careful planning is helping first-time homebuyers continue to make responsible and affordable homeownership decisions.
Susan Carter is a 25-year financial services veteran specializing in mergers, acquisitions and brand repositioning and development. She is passionate about insight-driven strategy. Susan is currently the VP, marketing & communications at Genworth Canada and a member of the Leadership Team overseeing strategic marketing and communications, sales training and development.
