It's no secret that home prices have been soaring to previously unthinkable heights amid the pandemic's third wave, as buyers continue to engage in bidding wars in record numbers in most major markets across the country.
In March, the buying frenzy cranked up the heat on home prices several more degrees, with accelerating price increases recorded in major markets, led by Montreal (up 22.4% year-over-year), Toronto (up 16.5%), and the Fraser Valley (up 16.0%).
Given the rising home prices, Canadians are now split between giving up on ever buying a home or putting away money to save for one, according to an RBC Spring Housing Poll.
Of the 2,000 Canadians surveyed, about 36% of non-homeowner participants under the age of 40 said they believe they will never own a home. What's interesting to note, the highest percentage of those surveyed who have “given up on the dream of homeownership” are located in regions currently with the hottest housing markets: 41% of respondents live in western Canada while 39% live in Ontario.
READ: Toronto Real Estate Market Now Hotter Than 2016 Housing Boom that Caused Government Intervention
At the same time, 62% of Canadians surveyed believe the majority of people will be priced out of the market in the next decade, with 71% of both Ontario and BC respondents and 65% of those polled from Alberta saying they “strongly” or “somewhat agree” with that statement.
The survey revealed that the pandemic has also proved to be an opportunity to increase one's overall savings, with 44% of all respondents saying they have saved more over the last year, while 60% said they are saving monthly, putting away $789 on average each month for a home.
"The road to homeownership isn’t always easy and the last year has created both challenges and opportunities for homebuyers,” said Amit Sahasrabudhe, Vice-President, Home Equity Financing, Products and Acquisitions, RBC.
“Potential homebuyers need to look at their personal financial situation as well as the current economic environment as both can have a big impact on the ability to purchase a home,” said Sahasrabudhe.
When it comes to purchasing intentions, despite 54% of Canadians polled saying it is a sellers’ market (up from 41% last year, the highest since 2009), there is a large increase in Canadians who are considering buying a home in the next two years (30%, up 8% from 2020).
What's more, this rises to 49% for those respondents under 40 years of age and 66% for new Canadians who have been in the country less than five years.
Of course, there are many factors that are influencing whether Canadians can buy now or later, with 41% of Canadians surveyed saying they are thinking about buying a home sooner because of low-interest rates and 61% saying they believe home values will only go up in the immediate future.
Four-in-five Canadians also continue to see housing as a good investment (83%) and the majority say it is better to buy than rent (56%). The key drivers among those waiting to buy a home include uncertainty about the economy (56%, up from 40%), a belief that prices may come down (41%), affordability issues (35%), and job anxiety (30%).
“Historically low mortgage rates and continued economic uncertainty have created a lot of unknowns for home buyers,” says Sahasrabudhe, but that being said, “building up a down payment can often be the biggest barrier to buying a home, especially as prices continue to climb in the pandemic environment.”
This comes as the Canadian Real Estate Association (CREA) said the average price of a home in Canada was reported to be $678,091 in Februry. Though, despite this, 48% of the poll’s respondents who plan to buy in the next two years said that their budget is less than $500,000. What's more, nine-in-10 of those who plan to buy in that time period have an average of $42,000 saved for their purchase.
“While everyone’s financial situation is different, many Canadians have been taking advantage of reduced spending over the year to build up their savings and get closer to making their dream of owning a home a reality,” added Sahasrabudhe.