Buying a home is a major financial commitment for most Canadians. It’s not surprising then that housing affordability is a top concern for homebuyers. In fact, according to the 2018 Mortgage Consumer Survey, price/affordability was the number one factor homebuyers considered when buying a home.
Here’s a breakdown of what you need to know about homebuyers and affordability, powered by the 2018 Mortgage Consumer Survey.
Before buying a home
While conducting our survey, we learned that 23% of those currently renting a home were renting because they couldn’t afford to buy.
Costs were a concern for first-time buyers. Of those buying a home for the first time, 58% had concerns or uncertainty related specifically to unforeseen costs. Plus, almost 1 in 5 first-time buyers (19%) were involved in a bidding war. These additional costs can add stress and financial pressure during the homebuying process.
Cost of homeownership
When it comes to the cost of homeownership, 85% of first-time buyers and 68% of repeat buyers spent the maximum they could afford on their home. About 1 in 5 homebuyers even said they paid more than they’d planned to. Nearly half (49%) of homebuyers made a down payment of less than 20% because they didn’t have enough for a larger payment.
One quarter of homebuyers ran into unexpected costs when buying. Additionally, about 1 in 5 homebuyers indicated that their level of debt was higher than expected.
Proper planning and budgeting can make a big difference when it comes to buying a home and being a homeowner. However, the Survey showed that only 76% of first-time buyers and 62% of repeat buyers had a monthly budget. Meanwhile, an even smaller percentage had a monthly buffer for unexpected expenses (64% of first-time buyers and 59% of repeat buyers).
Feelings about costs
Despite their concerns, 71% of homebuyers were comfortable with their current level of debt. Sixty-four percent even indicated that, if they ran into financial difficulties, they had other assets they could use to meet their needs. A further 81% were confident they would be able to make their future mortgage payments.
Seventy-six percent of homebuyers felt they had the necessary tools and information to manage their mortgage and debt load. Still, looking back, 31% of mortgage consumers wished they had more information on what to do when they ran into financial difficulties.
CMHC supporting Canadians
CMHC’s Homebuying Step by Step Guide helps Canadians look at their housing options, expected costs and personal financial situation. The goal: to help them decide whether homeownership is right for them.
CMHC also supports housing affordability through Canada’s National Housing Strategy — a 10 year, $40 billion plan that will help make housing affordable for Canadians.