Home buying attitudes are reversing back to pre-pandemic times
Michelle McNally
Livabl
For the last two years, the COVID-19 pandemic has had an unprecedented impact on Canada’s housing market, especially when it comes to buyer preferences.
As Canadians were mandated to work and school from home amid multiple lockdowns and stay-at-home orders, buyers went looking for bigger homes that could offer more space, privacy and comfort for their household. Functionality and larger living spaces became a priority for home shoppers, some of whom moved to other parts of the country to take advantage of lower prices in less built-up communities.
Now, as restrictions continue to be lifted and life slowly falls back into pre-pandemic routines, the sentiments of property purchasers are also changing again.
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Results released by an annual RBC Home Ownership Poll show that homebuying attitudes are shifting as Canadians move in a post-pandemic mindset. The online survey was carried out with 2,753 Canadians between mid- to late-January.
The intent to buy a home has now returned to January 2020 levels, with 23 per cent of respondents saying they are likely to purchase a home in the next two years. This is a drop compared to 30 per cent in 2021, but slightly higher than 2020 at 22 per cent. Alberta buyers expressed the most intention to purchase within a two-year timeline at 28 per cent followed by Ontario at 25 per cent.
“While there is still a significant amount of activity in the market, our research indicates that the rush of Canadians looking to purchase a home over the last two years has subsided and we’re now starting to see a move back to pre-pandemic levels,” said Andrea Metrick, senior director of home equity financing, acquisition and distribution at RBC, in the poll’s results.
“Between rising costs and the competitiveness of the market, Canadians may now be taking a step back and setting aside more time to plan and save before making the jump into home ownership,” she added.
High property prices impact purchasing decisions
A home’s location versus its size is a crucial factor in buyer decision making, but rising property prices are also playing an important role.
According to RBC’s poll, three-in-five respondents (59 per cent) stated that location is more important than buying a larger home as we return to normal, which may suggest that the need for more living space is becoming a lesser priority. Those respondents in Alberta, British Columbia and Ontario agreed with this sentiment the most, ranging between 62 per cent and 61 per cent.
Twenty-five percent of those surveyed said that they are willing to be further away from amenities to afford a larger home, while for those who rent, 27 per cent of respondents stated that they feel less pressure to buy than during the peak of the COVID-19 pandemic.
However, for those who believe higher real estate prices have impacted major life milestones, 47 per cent said that thinking about buying or saving for a home as prices grow is causing stress in their relationship. More than half of respondents (54 per cent) agreed that they are stressed knowing that they may need to purchase a home farther away from family and friends, and another 30 per cent felt that as a result of increasing prices, they may need to live with their parents longer to save enough funds to buy a property.
Financial worries are having an impact on many prospective buyers. Forty per cent of those surveyed said that they are feeling financially overwhelmed, and 42 per cent are worried that their financial position may deteriorate over the next year. In preparation for a home purchase, 37 per cent of the poll’s respondents said that they plan to continue to spend less post-pandemic so they can put savings towards buying a home. Meanwhile, 33 per cent believe they will struggle to cover the costs of homeownership as they return to pre-pandemic spending habits.
“Buying a home is the largest purchase most Canadians will ever make, so it’s natural that it comes with a certain level of stress, especially in today’s market,” said Metrick. “While home buyers can’t control market factors, taking the time to create a plan and understand where they are financially can help them feel more in control of the home buying process.”
Buyers are saving and budgeting more for homes
COVID-19 buyers were able to take advantage of some of the lowest mortgage rates in history. Now, as rates rise again, existing owners and potential buyers may feel the pinch.
Sixty per cent of respondents said they were concerned about interest rates rising in the coming year, but a little under half (47 per cent) stated that they are well-positioned to navigate an increase. Twenty-two per cent of respondents with a mortgage haven’t even considered what they could afford if rates were to rise, RBC found.
As prices trend upward, Canadians are saving and budgeting more for a home. On average, respondents stated that their budget would be $506,646 if they were to purchase a new home. This is a more than $53,000 increase from $453,231 in 2021. For those saving for a home, respondents say that they have set aside $196,286 on average, a $18,000 increase from $177,558 in 2021.
British Columbia buyers had the highest budgets and the biggest savings for property purchase, at $692,741 and $288,451.
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