The intentions and expectations of 3 types of homebuyers

The Canada Mortgage and Housing Corporation (CMHC) recently released the 2018 Prospective Home Buyer Survey results, which focuses on the buying intentions of three groups; first-time buyers, previous owners, and current owners.

There are many interesting findings spread out between different categories, including purchase drivers, housing expectations, buyer readiness, the impacts of changes to the housing industry, and financing.

“The Survey findings provide insights and valuable information for mortgage professionals about their future clients and their needs,” says Nathalie Fredette, Vice-President, Client Relationship Management. “It brings awareness amongst the industry and contributes to financial literacy by helping Canadians make informed and responsible home buying decisions.”

We’ve highlighted a few results that stood out to us! Make sure you check out all the results of the Home Buyer Survey.

Purchasing drivers

All three groups of buyers believe that homeownership is a good long term investment. Also, concerns of stricter mortgage regulations and increasing interest rates were not listed as top motivators to purchase.  

Housing expectations

Nearly half of the respondents in all three groups prefer a move-in ready home. About 20% of first-time buyers and previous owners are considering buying a new construction home, and 32% of current owners are leaning towards buying new.

When it comes to the type of home, single detached is still king, especially among current owners (74%). Condos came second, followed by semis and townhomes.

More than half of first-timers and previous owners plan to spend under $300,000 on a home. Current owners are looking to spend more with 34% looking at options over $500,000.

Financing a home

Only 11% of first-time buyers plan to use their own funds to purchase a home. They’re also more likely to put less than 20% down compared to the other types of buyers.

For the buyers who plan to purchase a home that requires renovations, first-timers and previous owners plan to spend $10,000 to $20,000 on renovations, while 44% of current owners plan to spend from $20,000 to $50,000.

Home buying readiness

27% of first-time buyers plan to buy in the next year. The percentage is higher among previous owners and current owners at 38% and 48%, respectively.

In the last three months before purchasing, only 16% of first-time buyers pre-qualified for a mortgage. You’d think it’d be higher among buyers with experience but only 21% of previous owners were pre-qualified during this time and 22% of current owners.

Impact of changes to the housing industry

Just 36% of first-time buyers were aware of the new mortgage regulations that kicked in at the beginning of 2018. Of those that weren’t aware, 20% say the changes will impact their decision to buy.

Other potential impacts among all buyer types include delayed purchasing, buying a smaller home, and saving for a larger down payment. The results suggest that increasing interest rates will have the same impact.

Overall, it seems like first-time buyers are concerned about buying a home this year, while previous owners are nearly split about the decision to do so, and current owners are comfortable buying if they find the right home.