Both homeowners and non-homeowners alike are reporting a higher likelihood of purchasing a home post-COVID, according to a new survey.
“We were surprised by responses that show higher expectations about buying homes in the near future,” remarked economist Will Dunning, author of the Mortgage Professionals Canada (MPC) report released Thursday.
Among those currently renting, 14% say they plan to purchase a home within the next year. That’s double the 7% reported late last year.
For existing homeowners, 9% now say they plan to buy within the next year, up from 7% at the end of 2019.
Existing homeowners say their biggest motivation to buy is that their current home is no longer suitable, either due to size or location, (38%). Another 10% say low interest rates make this a good time to buy.
For renters, the desire to “live in a nicer home” is the biggest factor (28%), with another 12% citing low interest rates.
Dunning adds a word of caution, however, noting that “not everyone who expects to buy has realistic prospects.” Some would-be buyers simply can’t find something in their price range once they start home hunting, and/or fail the mortgage stress test and are relegated back to renting.
The Impact of COVID
The survey specifically explored how much of a role the pandemic-induced lockdown has affected people’s changing housing needs.
“The responses suggest that, to this point, COVID-19 has had some effect on people’s desire to move,” Dunning said. “The most substantive COVID-19-related reason is that 12% of owners who expect to move indicated that working at home more is resulting in a need for more space.” The building trend towards sub-600-square-foot condos probably isn’t helping.
A full 24% of renters answered that their current living situation “isn’t conducive to the inclusion of a dedicated work area.”
The survey also found that about 20% of homeowners reported impaired income due to the pandemic. Of those, 5% said they would only be able to make partial or infrequent mortgage payments, while 2% said they would not be able to make any payments at all.
“What we have seen clearly is that the vast majority of homeowners are not feeling a long-term financial impact related to COVID-19,” said Paul Taylor, President and CEO of MPC, adding that “potential homebuyers are still very much in the market for a home, signs of which are being seen in regions across the country.”
The survey unearthed a few other interesting tidbits:
- Canadians’ expectations for house price growth are “the smallest we’ve ever seen,” said Dunning.
- Interest rate increase expectations are also at the lowest since these surveys began.
- In terms of how Canadians view housing, on average they treat their home as a place to live first and foremost (75%), and an investment second (25%).
On that last point, a home must serve both functions regardless of the percentages. The fact is, Canadians are increasingly relying on home equity to get through retirement. A 2019 RBC Retirement Myths and Realities poll found 55% of non-retired 50+ year-olds plan to use home equity as a source of retirement income. That rose from 49% the year prior.
A whole lot is riding on housing remaining a great investment for years to come. Probably too much is riding on it.