Despite rising affordability challenges, the majority of young Canadians still view homeownership as a valuable investment, according to a recent Royal LePage survey.
A full 84% of Canadians aged 18 to 34 said homeownership is a worthwhile investment, with even higher percentages in Saskatchewan and Manitoba (94%) and Atlantic Canada (93%).
Of those who don’t currently own a home, 74% said purchasing a home is a priority for them.
“It is not surprising that young buyer hopefuls see immense benefits in home ownership,” said Royal LePage CEO Phil Soper.
However, with high home prices and elevated interest rates, many feel it is increasingly out of reach. Just 54% of those who prioritize homeownership said they believe it’s an achievable goal, with another 26% saying they’re unsure.
“The youngest cohort of homebuyers in Canada have no shortage of barriers on their path to ownership,” Soper added. “Though the cost of borrowing has begun to come down, chronic supply shortages have kept housing prices from dropping, even as demand softened under the weight of high interest rates.”
The survey highlights that 60% of young Canadians who don’t currently own a home plan to purchase one within the next five years. However, financial barriers remain a significant hurdle, with nearly two-thirds citing down payments as the biggest obstacle to homeownership. Despite these challenges, many young Canadians are willing to make sacrifices, such as relocating to more affordable areas or reducing non-essential spending, to achieve their goal of owning a home.
Interestingly, the desire for homeownership among young Canadians is driven by a strong belief in the long-term financial benefits of owning property. Nearly three-quarters of respondents view homeownership as a solid investment, particularly as a means of building wealth over time. This perspective aligns with the broader Canadian belief that real estate is a secure and appreciating asset, even amid market fluctuations.
However, the report also points out the growing frustration among young buyers, many of whom feel priced out of their desired markets. This has led to increased interest in alternative living arrangements, such as co-ownership or purchasing smaller properties. Some young Canadians are also delaying their homebuying plans in hopes that market conditions will eventually improve.
Exclusive discount for MPC members at U.S. Digital Mortgage conference
Mortgage Professionals Canada and National Mortgage News have partnered to offer MPC members an exclusive offer for the DIGITAL MORTGAGE conference, happening September 9–10, 2024, in San Diego, CA.
Lenders (banks and non-bank lenders), loan officers and mortgage broker members save $700 with a special discount code.
To receive the discount code, members should email MPC at [email protected] before completing their conference registration.
What you will learn:
- Emerging Trends: Understand the optimal originations channel mix for banks vs. non-banks, and the key wins and challenges in servicing. Learn what this means for the next five years.
- Responsible Innovation: See how government and industry align on responsible innovation, balancing risks and opportunities.
- Future Tech: Explore tomorrow’s technology and the innovative, cost-saving capabilities on the horizon.
This is a great opportunity for Canadian mortgage professionals to bring the latest insights back to your business to create a roadmap for your future-ready firm.
Those interested can Register Here.
OSFI to provide quarterly updates
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), announced last week that it will now provide quarterly updates to enhance transparency and communication with stakeholders.
These updates, to be released during the second month of each quarter, will include key insights and decisions on regulatory matters affecting the financial sector. OSFI said the releases will combine timely updates on guidelines, consultations, policy papers, letters and industry notices, as well as pensions guidance to Canadians and OSFI stakeholders.
“This new standardized approach supports critical financial and non-financial risks to financial institutions identified in our Annual Risk Outlook (ARO),” Assistant Superintendent Tolga Yalkin said in OSFI’s first release. “It will also allow us to be more predictable and transparent in the way we inform our stakeholders and the Canadian public about our work, while streamlining how we release our regulatory guidance.”
Modular homes a key part of Quebec’s housing strategy
The Quebec government last week unveiled its Housing Strategy, a plan to address the province’s housing shortage.
One of the key components of the plan is the adoption of modular housing. This approach involves assembling pre-fabricated modules on-site, which can speed up construction and reduce costs. The strategy includes incentives for developers to adopt this method, aiming to deliver more affordable housing quickly.
“The adoption of cutting-edge technologies and innovative processes in the field of residential construction is essential to increase productivity, reduce construction times, increase quality and minimize costs,” the government said.
The province is set to issue its first call for tenders to construct 500 prefabricated affordable housing units, with the government planning to invest $3.7 billion over the next five years to enhance housing affordability and support households in need.
The Quebec government is aiming to build 560,000 housing units in the province over the next 10 years, an increase of 115,000 units from its initial objective.
Equitable Bank launches Laneway House mortgage product
Equitable Bank has introduced a new financing option aimed at supporting homeowners and increasing urban housing density.
The product provides homeowners with access to financing for creating additional dwelling units (ADUs) on their properties, such as basement apartments or laneway houses. This initiative aligns with broader efforts to address housing shortages in urban areas by making it easier for homeowners to add rental units.
“Making efficient use of space in cities as Canadians’ housing needs evolve is more important than ever,” said Mahima Poddar, SVP and group head of personal banking. “The Laneway House Mortgage provides a critical solution that can help support urban densification and create additional income streams amid affordability challenges, while also allowing homeowners to stay in place.”
The Laneway House Mortgage is available for properties that are either mortgage-free or in combination with new or existing mortgages where Equitable Bank holds, or will secure, the first position.
This construction loan is accessible to homeowners through Equitable Bank’s network of mortgage broker partners, ensuring that the solution is tailored to meet the specific needs of borrowers.
Mortgage snippets
- Canadian building permits: Canadian building permits dropped 13.9% in June to a seasonally adjusted $9.9 billion, following a similar decline in May and reflecting ongoing challenges in the construction sector. Residential permits fell 11.5% to $6.5 billion, while non-residential permits saw an 18.1% decrease to $3.5 billion. Ontario and British Columbia led the downturn, with multi-family permit values in Ontario dropping 25.7% and British Columbia 31.1%. Permits were issued for 20,400 new dwellings in June, totalling 263,400 new units over the past 12 months.
- New home prices rose in July: New home prices were up 0.2% in July, Statistics Canada reported. According to the New Housing Price Index (NHPI), prices were up in 10 of the 27 census metropolitan areas, with the largest gains in Calgary, Edmonton, Kelowna and Regina (each up 0.8%).
“The rapidly growing population continued powering demand for new housing,” StatCan noted. The largest month-over-month decreases were reported in Kitchener–Cambridge–Waterloo (-0.5%) and Ottawa (-0.2%).
On a year-over-year basis, national new home prices were up 0.1% in July, with the largest increases posted in Calgary (+5.2%), Trois-Rivières (+3.1%) and Edmonton (+2.0%). The largest declines were seen in Ottawa (-4.1%) and Kitchener–Cambridge–Waterloo (-2.7%).
- MCAN Q2 earnings results: MCAN Financial Group reported net income of $19.7 million in Q2, up 24% year-over-year. It also saw its total assets grow 7.5% to $5.1 billion. Uninsured residential mortgage originations year-to-date totalled $197 million, up 11% from last year, while insured mortgage originations were up 69% to $356 million.
“The economic and interest rate environment and its impact on the housing market and borrowers has improved somewhat due to expectations about further interest rate cuts,” the company noted. “We have also seen solid uninsured residential mortgage renewal rates with renewals of $259 million year to date 2024 compared to $258 million for the same period in 2023 as borrowers find it more convenient to stay with their existing lender in the current market environment.”
EconoScope: Key economic releases on tap for this week
Last week’s headlines
Visited 1,329 times, 2 visit(s) today
building permits digital mortgage conference equitable bank Laneway House Mortgage Mahima Poddar MCAN Home modular housing mpc National Mortgage News new housing price index OSFI Phil Soper quebec government Royal LePage Royal LePage survey weekly mortgage digest
Last modified: August 28, 2024