Canadians Opt To Buy Real Estate Now Rather Than Later

Royal Bank survey finds three in 10 Canadians are planning to buy a new home within the next two years according to RBC Royal Bank article published in the Westcoast Homes & Design Magazine May 2007.

The possibility of mortgage rates rising in 2007 seems to be of much less concern across Canada, according to the RBC’s 15th Annual Homeownership Survey. In fact, more than half (57 per cent) of Canadians believe mortgage rates will drop or stay the same, compared to 31 per cent last year. The RBC poll also reveals that 49 per cent of Canadians are less apprehensive about interest rate increases, compared to 44 per cent in 2006.

“When we assess the consumer setiment being expressed in this year’s study, a picture emerges of confident Canadians weighing their homebuying options in a very positive light,” explained Catherine Adams, RBC’s vice-presdient of Home Equity Financing.

At the same time, while more than half of Canadians (59 per cent) believe housing prices will rise in 2007, homebuying intentions are holding steady, with three in 10 Canadians (28 per cent) planning to buy a house over the next two years.

As for the value of Canadians place on homeownership, the vast majority (90 per cnet) think purchasing a home is a good investment, according to RBC’s pool. As well, the percentage of Canadians who estimate that the market value of their homes has increased by 50 per cent or more over the past two years, has doubled since last year’s survey (11 per cent compared to six per cent).

“it’s clear an overwhelming majority of Canadians believe purchasing a home is a good investment in real estate. In fact, the average Canadian estimates their home has increased by 22 per cent in the last two years,” Adams added. “And the ‘buy now’ message is coming through loud and clear across all age groups – from 25 through to 55 plus.”

Of those Canadians planning to buy a house within two years, an increasing number are looking at a shorter purchasing windows. More than half (58 per cent) of all Canadians are saying buy now, don’t wait for next year. Forty-four per cent (up from 37 per cent in 2006) are looking at buying within the next 12 to 18 months.

There also does not seem to be a sub-prime hangover in Canada. Where the US subprime mortgage crisis is getting worse, the Canada subprime lending is still very strong.

Regional Differences
Focusing on very likely to buy intentions, B.C., Ontario, and the Prairies are holding steady from last year, bu the numbers have softened in other regions with Alberta going from 18 per cent to 12 per cent; Atlantic going from 14 per cent to 10 per cent.

Renters and Owners
Within the next 18 to 24 months, 62 per cent of renters and 48 per cent of owners plan to buy a home. Withing the shorter time frame of the next 12 months, owners outnumber renters, 27 per cent to 18 per cent.

Housing Type Preferences
Detached homes continue to be the housing type of choice by most Canadians who are likely to buy a home in the next two years – 72 per cent voiced this preference. Condominiums were preferred by 10 per cent, down from 12 per cent last year. Semi-detached homes were cited by seven per cent, up from four per cent in 2006. Townhouses fell to last choice, named by six per cent of Canadians planning to buy in the next two years, down from eight per cent last year.

Thinking Small
Desiering a bigger house continue to be the most popular reason for an upcoming move, cited by 48 per cent of Canadian homeowners who are planning to purchase a home in the next two years. However, an increasing number are now saying they’ll be looking for smaller home – 33 per cent compared to 20 per cent in 2006. Eighteen per cent responded that they’ll be considering a home about the same size as their present one.

RBC Royal Bank