First-time buyers are doing their homework and making responsible financial decisions entering Canada’s housing market. The typical first-time homebuyer is well-educated, employed, consulting with mortgage industry professionals and purchasing a home within financial reach.
These findings are from a study conducted earlier this year by Genworth Canada. More recently, the company invited customers to attend a session with David MacDonald of Environics Research Group to delve deeper into the results of the survey and discuss specific traits and behaviours of first-time homebuyers when it comes to making key decisions in the home buying process.
Overall, first-time buyers tend to have higher incomes than the general population with 31 per cent having household incomes above $100,000. Other typical traits of this primarily millennial population include working full-time (81 per cent), holding a post-secondary education (89 per cent) and married or in a common-law relationship (71 per cent). One-fifth of all those surveyed were born outside of Canada with 62 per cent of that group having immigrated in the past 10 years.
According to the survey, the typical first-time buyer is also conscious of the need to manage their debt burden carefully. More than half (57 per cent) have taken care to avoid taking on additional debt since buying their home. In addition, one-third (36 per cent) have doubled-up or increased their bi-weekly mortgage payments, or made a larger, one-time lump sum payment.
Clearly there are regional variations across Canada with respect to affordability that lead to some significant differences in price paid, type of home purchased and down payment levels, reports Genworth Canada. While the median price paid nationally is $293,000, this amount is highest in Toronto ($425,000) and Vancouver ($420,000) and lowest in the Atlantic region ($185,000).
These price variances explain the higher proportion of condo and townhome purchases in Toronto, Vancouver and Montreal, where such properties are the most affordable way to enter homeownership. Nationwide, 55 per cent of first-time buyers settle on a fully detached home with 17 per cent opting for a condominium, 15 per cent buying a townhouse and 13 per cent purchasing a duplex. By contrast, condominiums are the most popular option in Vancouver (47 per cent), Montreal (40 per cent) and Toronto (39 per cent). In Atlantic Canada, fully detached homes account for 71 per cent of all first-time home purchases.
The survey also notes higher median down payments in Toronto and Vancouver, which appear to be driven by higher savings and larger gifts or loans from a family member in those markets. While the median down payment nationally is 12 per cent, this amount ranges from eight per cent in the Atlantic region to 21 per cent in Toronto. Overall, 63 per cent of buyers surveyed made a down payment of less than 20 per cent.
In terms of factors influencing choice of home, the group ranked price (94 per cent), safe neighbourhood (91 per cent) and size (90 per cent) as their highest priorities. Other top motivators include the belief that owning is a wiser financial decision than renting, having saved enough for a down payment and wanting control of the property they live in.
“First-time homebuyers reflect the home buying population as a whole when it comes to their general motivations and considerations,” says David MacDonald, group vice-president, Environics Research Group. “They’re looking for affordability, safe streets and a space they can enjoy. Even when opting for a condo, these factors rank higher than, for example, return on investment.”
Click here to watch a video replay of the Sept. 22 seminar, which was held at the Genworth Canada offices in Oakville, Ont.