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Optimism prevails among first-time and prospective homebuyers despite economic challenges

Despite rising interest rates and a challenging economic environment, first-time and prospective homebuyers are much more optimistic about Canada’s housing market compared to the general population.

A full 43% of first-time buyers and those intending to buy say now is a good time to buy a home, with 14% believing it’s a “very good” time and 30% saying it’s a “somewhat good” time to purchase, according to a consumer survey from mortgage insurer Sagen.

Among this group, just over a quarter (27%) think now is a bad time to buy.

Among the general population, just 13% think now is a good time to buy, with 2% saying it’s “very good” and 11% saying it’s “somewhat good.” A full 50% said now is a bad time to purchase a home.

The results show that first-time buyers remain determined to enter the housing market despite current economic conditions.

Over half of first-time buyers (52%) said recent economic conditions, including high inflation and rising interest rates, would not have changed their decision to buy their home.

Even among those who are still considering purchasing, over a quarter (26%) say current economic conditions have had no impact on their plan to purchase a home.

We asked a mortgage broker, why confidence might be so high among this group of buyers and prospective buyers. She noted that the stabilization of interest rates at around the time the survey was conducted could be a factor.

“One reason I consider confidence is rising is because the house pricing has come down from 2021,” she said.

“Now, the main reason I think that people are having a little bit of confidence is that they’re seeing the rates have stabilized. A year ago, rates were suddenly making a move up, and they’ve just continuously gone up,” she added. “Now, everybody feels like [they’re approaching] their peak, whether they have or not.”

She added that those in the market are more adjusted to seeing 5% rates than they were compared to just six months ago.

Changing demographics of first-time buyers

The survey results also reveal a change in the demographic of first-time buyers, namely that the mean age of this group is rising.

In 2015, the mean age of first-time buyers in Canada was 31, but that has since risen to 34 as of 2023. Over that time, the percentage of first-time buyers under the age of 30 has fallen to just 24%, down from 36%.

And in 2015 just 23% of first-time buyers were over the age of 35, with that age group now making up 37% of first-time buyers.

There has also been a shift in household income. Under a third of first-time buyers had a household income above $100,000 in 2015, whereas that percentage has risen to 48% as of 2023.

Similarly, now less than a third (30%) of first-time buyers have a household income of $75,000 or less, down from 44% in 2015.

Six in 10 buyers received financial support from family

Another key finding was the fact that nearly 60% of first-time buyers reported receiving financial support from their families in order to make their down payment.

Among those who received support:

  • 35% received financial assistance in the form of a lump sum payment

  • 25% received assistance with their monthly payments

  • 10% had a parent or relative co-sign on their mortgage

Additional findings

Some other key findings from Sagen’s survey include:

  • 78% of first-time buyers said they would be concerned about their ability to make their mortgage payment if interest rates rose further (which they have since the survey was completed)

    • This is up from 63% in 2021

17% of first-time buyers report suspending or delaying their mortgage payments

  • This is down from 23% in 2021, but up from 15% in 2019

  • 16% said they have delayed or defaulted on a non-mortgage payment

  • This is down slightly from 17% in 2021

  • 32% of first-time buyers said they doubled-up or increased the amount of their mortgage payments

  • This is down slightly from 33% in 2021

  • 25% reported making a lump-sum payment towards their mortgage

  • This is down from 32% in 2021

The results are based on a survey of 2,223 Canadians aged 25-45 who had purchased their first home within the prior two years, or plan to purchase their first home in the next two years. The survey was conducted in March.

Afua Mfodwo Mortgage Industry News June 20, 2023


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