The 2017 Zoocasa Housing Sentiments and Trends Report

Survey reveals home ownership in Canada a top life milestone

Real estate affordability and supply challenges have dominated the conversation around

Canadian home ownership, but, despite the rising cost of homes in Canada, the 2017 Zoocasa

housing sentiments and trends report shows that those surveyed still considered home ownership

or property investment to be a desirable and important milestone, whether as first-time buyers,

move-up buyers, or downsizers.

 

The 2017 Zoocasa Housing Sentiments and Trends Report was created from an online survey of

more than 1,100 Canadians from February 2017 to March 2017. It provides insights into

perceived obstacles to ownership and stress factors when purchasing a home. The report also

gathered information from the Canadian Real Estate Association (CREA).

 

Foreign buyer ownership

Did respondents feel that foreign buyers were driving up real estate prices in their city?

  • Ontario: 66 per cent said yes
  • British Columbia: 73 per cent said yes
  • Alberta: 39 per cent said yes

Overall, 61 per cent of Canadians surveyed felt that foreign buyers were driving up real estate in

their cities.

How important is home ownership as a life milestone?

  • 83 per cent of respondents said owning a home is an important life milestone.
  • 67 per cent felt that Canadians should own a property by the age of 35.
  • 34 per cent agreed that people should own a home before they have children.

What are aspiring buyers willing to consider to own an affordable home?

  • 32 per cent noted they were willing to add up to 30 minutes each way to their daily commute for an affordable home.
  • 23 per cent cited the ability to earn income from the property as an important factor when buying a home.
  • Six per cent would consider buying a property where a murder was recently committed to help with home affordability.

 

Canadian housing outlook & sentiment

Recent years have marshalled in considerable change to the real estate landscape with record

prices, new rules, taxes and warnings that have impacted the ability of some Canadians to

purchase a home or qualify for a mortgage.

 

Synopsis of real estate prices:

Overall, in Canada, homes that were $400,000 in June 2015 rose by approximately $200,000, in December 2017.

In Toronto real estate, homes that were priced at $600,000 in June 2015, continued to climb to under the $100,000-mark in December 2017.

 

Vancouver experienced pricey dips from approximately $850,000 in June 2015 to over $1,00,000 in December 2015, then

dropping down to $800,000 in June 2016, and levelling off at $1,000,000 in December 2017.

 

News timelines:

July 2015: Bank of Canada cut interest rates to 0.50 per cent resulting in lower borrowing costs.

February 2016: CMHC announced a 10 per cent minimum down payment on the portion of

insured mortgages over $500,000 to cool the housing market.

July 2016: B.C. announced a 15 per cent foreign home buyer tax; the number of sales

immediately dropped almost 20 per cent.

October 2016: Federal government implemented 4.64 per cent mortgage stress test for high-

ratio mortgages.

March 2017: Toronto home prices increased 33.2 per cent year-over- year to a record high of

$916,567.

 

Eighty-three per cent of Canadians surveyed felt that the housing market had changed significantly in recent years.

The census clearly shows that, nationally, residents are split on housing market confidence, when asked the following:

In general, do you feel confident in Canada’s real estate market?

  • Not sure 37 per cent
  • Confident 34 per cent
  • Not confident 29 per cent

Despite varying confidence levels in the market, the overwhelming majority of Canadians

indicated that homeownership was still an important rite of passage. Of respondents, 83 per cent agreed that ownership would

be a major life milestone, while only eight per cent felt that it wasn’t important, and another eight per cent felt uncertain.

 

Home affordability challenges

Both first-time homebuyers and current owners aspiring to buy again indicated that affordability is a barrier to their future home-purchasing goals. Respondents identified that two of the top three obstacles to buying their next property were related to affordability. Out of potential buyers, 54 per cent cited rising real-estate prices as a challenge, and 35 per cent indicated that the concern was saving for a down-payment.

Respondents identified the following factors as obstacles to purchasing property:

  • 54 per cent Rising real estate prices
  • 39 per cent Finding the right property
  • 35 per cent Saving for a down payment
  • 19 per cent Finding the right neighbourhood
  • 18 per cent Employment situation
  • 12 per cent Paying for closing costs
  • 10 per cent Debt or bankruptcy
  • 3 per cent Finding the right realtor

 

Household income of investors

Not surprising, higher-income households are more likely to own investment homes, as increased cash flow is generally needed to qualify for additional mortgages and finance a down-payment, especially since the financial barrier to enter the market has increased in Canada’s urban centres.

Respondents who own investment property by household income illustrated the following:

  • 4 per cent Less than $20,000
  • 4 per cent $20,000 to $34,999
  • 9 per cent $35,000 to $49,999
  • 10 per cent $50,000 to $74,999
  • 15 per cent $75,000 to $99,999
  • 28 per cent $100,000 to $149,999
  • 12 per cent $150,000 to $199,999
  • 19 per cent $200,000 or more

Not surprisingly, Ontario and BC respondents were more likely to identify rising real estate prices as an obstacle for an upcoming property purchase.

Respondents who cited “rising real estate prices” as an obstacle, by region, are as follows:

  • British Columbia 51 per cent
  • Alberta 28 per cent
  • Saskatchewan & Manitoba 36 per cent
  • Ontario 62 per cent
  • Quebec 29 per cent
  • Atlantic Region 32 per cent

Real estate investment seems to require a team approach. A large majority of investment property owners reported being married or in a common-law relationship, and the Canadian median household income was estimated at $78,870.

 

Zoocasa is a real estate brokerage based in Toronto.