With the majority of the year behind us, it looks like the Canadian housing market bounced back in 2019, but we can’t say the same about first-time buyers.
According to the results of the Canada Mortgage and Housing Corporation’s annual Mortgage Consumer Survey, the percentage of buyers who were first-timers dropped from 56% in 2018 to 47% in 2019.
"The mortgage consumer survey's goal is to help put Canadians and the mortgage professionals who serve them in the best position to succeed when shopping for a mortgage," says Sam Carnavole, CMHC's Director of Client Relationship Management. "This year's survey includes important takeaways on affordability and the first-time buyer's journey from renting a home to owning one. We hope the survey helps Canadians get the most of what can be an overwhelming process."
Most of the first-time buyers in Canada in 2019 were aged 18-34 and living in Ontario. More than a third of first-time buyers rented for more than 10 years before buying. In 2018, 39% were renting on their own before buying, and this year, that cohort dropped down to 23%. In fact, 44% of first-time buyers were renting with family or friends before buying, which is much higher than 28% in 2018.
Looking at all buyers, 60% spent the max they could afford, which is actually down quite a bit from 78% last year. The mortgage stress test likely had a little bit to do with this. Everyone’s borrowing power was weakened, so many buyers probably lowered expectations and budget. CMHC says that 65% of buyers believe the stress test will prevent more Canadians from taking on mortgages they can’t afford (which is a good thing).
The top must-haves when buying a home were affordability (80%), the number of rooms (73%), and close proximity to transit (67%). Nearly 60% of buyers cut back on non-essentials since buying. The most common cutbacks were in entertainment (66%), vacations (55%), and food (44%).
As the market rebounds with sales activity and prices on the rise again, we wonder if first-time buyers will continue to fall off through 2020. This would put tremendous weight on the rental market!