COVID-19 fuels homebuying plans in Canada

Although the global pandemic almost stopped Canada’s housing sector activity, it looks like over the longer term it only fueled homebuying intentions.

The recent poll by Mortgage Professionals Canada (MPC) shows that 14% of today’s renters plan a home purchase during the next 12 months, while it was only 7% at the end of 2019. In addition to it, the number of renters who say they would never buy a house was also down from 32% to 14%.

In case of current homeowners, the results show 9% plan to make a purchase over the year, which is 2% more than in late 2019.

Study author Will Dunning, Chief Economist at MPC, was frankly surprised by such results.

“It seems that the current emergency has made more non-owners decide that they want to purchase homes (for instance, to switch from apartment building with quite challenging social distancing to a lower-density area),” – he said, noting that extremely low mortgage rates are also contributing to a cheaper homeownership.

According to the survey, here are the main reasons why renters want to buy their own home:

• 28%: “I would like to live in a nicer home”
• 14%: “My home is no longer suitable”
• 14%: “Now is a great time for a home purchase due to the current situation”
• 12%: “Now is a great time for a home purchase due to low interest rates”
• 11%: “I would like to live in a less expensive area”

In case of existing homeowners, their strongest motivator was that their current home is no longer suitable (38%). Another 13% want to have a nicer property, and 12% pointed to low interest rates.

The report also highlighted the reasons why respondents said their existing home was not suitable:

•  “If I spend more time at home I need also more space” (31% for owners and 33% for non-owners)
• “My home isn’t suitable for a work area and can’t be (or too difficult to) modified” (17% for owners, 24% for non-owners)
• “During the quarantine, my home doesn’t support my mental health or provide enough outdoor space” (14% for owners, 17% for non-owners)
• “I need to live in an area with more social distancing possibilities” (9% for owners, 7% for non-owners)

How did COVID-19 affect buyers and owners?

• • 20% of homeowners have faced income decline because of the pandemic
  • 68% of first-time buyers and 75% of repeat buyers noted they would have no difficulty with their mortgage payments
  • 1% of first-time buyers noted they could only make partial or infrequent payments, while it was 0% in case of repeat buyers

“It’s obvious that most homeowners are not facing a long-term financial influence of COVID-19, and potential homebuyers are still very much interested in making a purchase. The signs of it are seen all over Canada”, – said Paul Taylor, President and CEO of MPC.