With the rise of home prices, there comes the inevitable rise of down payments. Couple this with the other rising costs associated with inflation and the cost of living, many first-time buyers are feeling the pinch and are looking for outside financial support to help them buy their first home.
As home prices and interest rates continue to rise, whilst inventory remains extremely tight, Canada’s first-time buyers are feeling increasingly worried about missing out on their desired home because they don’t have enough of a down payment.
According to a recent survey released by Sagen™, conducted by Environics Research with a series of questions for Royal LePage, 67% of first-time buyers (those that purchased a home within the last two years) said that before buying, they worried they might miss out on the property they really wanted because of insufficient down payment. This reflects a five-point increase compared to the same survey question in 2021 (62%), and a ten-point increase over the 2019 result (57%).
When the same question was asked to first-time intenders – those who plan to buy their first home in the next two years – 63% reported feeling worried that they will miss out due to insufficient down payment, a three-point increase from the same survey question in 2021 (60%).
“Canadians continue to face challenges in entering the real estate market, be it high-interest rates, strict mortgage qualification standards, or difficulty saving enough money in a reasonable time period for a down payment,” said Phil Soper, president and CEO, Royal LePage. “That first transaction is the most difficult, and in today’s environment, first-time buyers are faced with large price tags, high carrying costs and the added challenge of qualifying for lending at higher rates due to the stress test.
“Still, they continue to prioritize home ownership and view it as a milestone worth achieving. With household savings still sitting above historical norms, due to accumulation during pandemic lockdowns, many Canadians will have a leg-up on their down payment when they are ready to enter the market,” added Soper.
Here are a few highlights from the Royal LePage 2023 Canadian First-time Homebuyer Survey:
In Greater Calgary, the percentage of first-time homebuyers who were worried about their down payment has increased substantially, from 42% in 2021 to 69% in 2023
74% of first-time homebuyers in the Greater Toronto Area, 71% in Greater Vancouver, and 67% in the Greater Montreal Area reported feeling worried that they would not have a large enough down payment to purchase a home they really wanted
More than a third of first-time buyers (35%) received financial assistance in a lump sum payment toward their purchase, while a quarter of buyers (25%) received support on their monthly mortgage payments
Are you thinking about buying your first home, and looking for tips on how to get into the market? Contact our team today.
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