A new home finance survey from the Bank of Montreal has found that, among other things, more Canadians are looking to buy in major city centres as business picks up once again at urban offices.
The survey notes that interest in buying a home in a major city centre has risen 5% since last year. This comes after many Canadians began looking beyond the boundaries of large cities for their housing choices, spurred on by work-from-home arrangements and rising home prices in the last two years. Now, not only are city centres attracting more interest from buyers, but BMO notes that preference for moving further from the city has seen a similar decline.
Those aren’t the only changes in Canadian’s buying plans according to the survey. Across the board, results seem to indicate that Canadians have become increasingly prepared to change their plans in response to rapidly changing housing conditions.
According to Hassan Pirnia, Head of Personal Lending & Home Financing Products, BMO Financial Group, “Financial hurdles are having a major impact on the purchase plans for these consumers in terms of what they will buy and when they will buy. Most understand that they will need to spend more; the impact on timelines is split, with some buying sooner before prices go up more and some holding off to see if prices come down.”
The results of the survey indicate that 68% of respondents were willing to change how much they spend on a home purchase, with 73% of those willing to spend more. The reasons listed for spending more on a home include increased home prices, growth in income, and increased savings because of the pandemic.
More than one-third of respondents expect to pay 10% or less for a down payment and two-fifths are relying on help from family to have enough funds.
Overall, the survey found that the amount Canadians expect to spend on their homes has increased 26% in just the last year with the average spend coming in at $588,000. Buyers in Ontario had the highest expected spend at $790,000 and the highest increase from last year, going up over $200,000.
Finally, more Canadians are rushing for mortgage pre-approval amid the uncertainty of rising interest rates. 30% of survey respondents said they are already pre-approved to buy, up 8% from last year, with another 43%3 planning on getting pre-approved in the future.
“Market conditions are quickly changing,” said Robert Kavcic, Senior Economist, BMO Capital Markets in the report. “We could see much more balanced conditions very soon as the Bank of Canada is expected to raise interest rates further through the remainder of the year. That will bite into affordability and possibly temper market psychology. Longer term, underlying fundamentals are still strong thanks to a firm job market and demographic support.”