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Young Canadians Optimistic About Homebuying, Expect Prices to Fall

Sept. 24, 20
3 mins
A young couple moving boxes into their new home

Those under 35 remain the most optimistic about purchasing a home, with many saying the pandemic has accelerated their homebuying intentions.

Nearly one in five Canadians (18%) aged 18-34 say they plan to purchase a home or investment property sooner compared to before the pandemic. That’s according to the results of the Scotiabank Housing Poll.

A big factor driving this optimism is historically low mortgage rates. Despite average home prices going into orbit, interest rates have been plummeting. That’s helped to balance out payment affordability. Although, it hasn’t gotten much easier to qualify for a mortgage since the stress test rate is being kept artificially high.

New buyers looking to get into the market with a down payment of less than 20% can find insured 5-year fixed mortgage rates as low as 1.52% right now. That’s down from around 2.49% a year ago.

For every $100,000 of mortgage, that works out to a savings of $46.82 per month, or $4,291 over the five-year term.

On the average new mortgage size of $289,000, according to Equifax Canada, today’s new homebuyers stand to save up to $12,401 with a 5-year fixed rate vs. a year ago.

Younger Canadians More Likely to Expect Home Prices to Fall

The survey also found younger demographics are more likely to think home prices will decline as a result of COVID-19.

Nearly four out of 10 (36%) of those aged 18-34 think prices will decline over the next 12 months, and about a third of them (32%) say they are waiting for prices to fall before buying a property.

Canadians are less likely to expect home prices to drop the older they get. A quarter (24%) of those aged 35-54 believe home prices will decline in the next 12 months vs. only 17% of those 55 and older.

Homebuying Intentions Amid COVID

This year’s pandemic-induced lockdown negatively impacted the finances of one in five Canadians (20%). In many of those cases, homebuying plans had to be put on hold.

The Scotia survey found 77% of renters have no plans to purchase a home in the next one or two years, despite lower interest rates.

A Mortgage Professionals Canada report on homebuying intentions released last month similarly found that about 23% of renters expect to buy a home in the next two years, which was up from 19% at the end of 2019.

It seems low rates and runaway prices (fear of missing out) are, at least partly, countering the COVID effect.

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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