In the midst of an ever-evolving real estate landscape and a busy spring market that surprised even economists with its “vigour,” first-time homebuyers in Canada are displaying remarkable optimism.
According to a recent survey released by Sagen, 43 per cent of recent buyers and 36 per cent of future intenders are expressing confidence in the current market conditions, viewing it as a good time to enter homeownership. This sentiment stands in stark contrast to the general population, where half of the respondents believe it is a bad time to buy, while only 13 per cent believe it is a favourable time to purchase a home.
The survey analyzed data from individuals who purchased homes within the last two years as well as those who plan to buy within the next two years.
“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.
Housing supply challenges persist, but confidence remains high
The survey reveals that the lack of housing availability continues to be a significant challenge for first-time homebuyers in Canada. About four in 10 respondents from the general population believe there is an insufficient supply of homes available, though this number has decreased from 55 per cent in 2022.
Economic conditions impact decision-making and preferences
Despite economic conditions such as rising interest rates and inflation, the survey suggests that recent first-time homebuyers have remained resilient in their pursuit of homeownership.
A quarter of recent buyers state that economic conditions have had no impact on their ability to afford their homes, while 52 per cent acknowledge the challenges but would not have changed their decision to buy. Among future intenders, 43 per cent have delayed their home-buying plans due to current conditions, while 35 per cent have chosen not to let the conditions affect their timeline.
These economic conditions have also influenced the size and location preferences of recent buyers and intenders. About a third of first-time buyers and 37 per cent of future intenders report purchasing or planning to purchase smaller homes than initially expected. Additionally, 34 per cent of recent buyers and 31 per cent of future intenders have opted for more affordable neighbourhoods than originally intended.
Proximity to work and home office space is even more important
The survey findings highlight the impact of the hybrid work environment on the preferences of first-time homebuyers. Both recent buyers and future intenders now place greater importance on the proximity of their homes to their workplaces compared to previous years.
The desire for a shorter commute time has increased in significance since the depths of the pandemic. Additionally, the need for dedicated space to work from home has become a top priority, with three-quarters of recent buyers and three-quarters of future intenders expressing its importance.
The energy efficiency of homes has also gained prominence, with a quarter of recent buyers and 84 per cent of future intenders considering it an essential factor.
Condo living on the rise as affordability drives choices
In search of more affordable housing options, a growing number of first-time homebuyers are choosing condominiums. The survey indicates that 24 per cent of both first-time homebuyers and future intenders are opting for condos, representing a steady increase since before the pandemic.
On the other hand, the proportion of buyers seeking fully detached homes has been decreasing, with 46 per cent of recent buyers and 47 per cent of future intenders indicating this preference.
“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.”
Levings advises property developers, particularly condo builders, to take these changing preferences into account when designing homes. The demand for adaptable spaces that cater to both in-person work and remote work is evident. Developers should prioritize creating functional home office areas and ensuring energy efficiency in their designs to meet the evolving needs of first-time homebuyers.
Family support crucial for overcoming financial hurdles
The survey highlights the increasing importance of family support in assisting first-time homebuyers. More than a third of respondents received financial help from their families for their down payments, and 25 per cent are receiving help with monthly mortgage payments. Without this assistance, many recent buyers would have faced significant challenges. Nearly half say would have delayed their purchase until they could save a larger down payment, while 42 per cent would have had to settle for a smaller down payment on their current home.
The support from families underscores the financial hurdles faced by first-time buyers in Canada’s real estate market. Affordability remains a key concern, and the assistance provided by family members plays a crucial role in helping individuals achieve their homeownership goals.
