COVID-19 doesn’t affect Canadanians decision in purchasing a home
COVID-19 pandemic hasn?t dimmed enthusiasm for buying a home, says report
REM
The Vancouver Sun
A new report by Mortgage Professionals Canada (MPC) says most current homeowners are comfortable with their current mortgage debt and remain pleased with their decision to purchase a home.
“What we have seen clearly is that the vast majority of homeowners are not feeling a long-term financial impact related to COVID-19, and that potential home buyers are still very much in the market for a home, signs of which are being seen in regions across the country,” says Paul Taylor, president and CEO of MPC. “To this point, the greatest economic effects of COVID-19 have been experienced by young age groups and people in lower wage occupations. In consequence, the housing market impacts will likely be greater in the rental sector than for homeownership.”
Will Dunning, MPC’s chief economist and author of the report says, “We were surprised by responses that show higher expectations about buying homes in the near future: Among non-homeowners, the expectation of buying in the next year has doubled, from seven per cent at the end of last year to the current 14 per cent. There has also been a rise in expectations about buying for people who already own their home.
“These heightened expectations could reflect the sharp reductions in mortgage interest rates, as well as desires to move to situations where social distancing is easier.” But Dunning warns that “an increased desire to buy homes won’t necessarily result in more actual purchases,” because “not everyone who expects to buy has realistic prospects of actually buying. Also, some people, when they research their options, may decide not to buy. Or, they might discover that because of the mortgage stress tests, they would be unable to obtain the financing they would require.”
Dunning’s report also found that:
- Mortgage holders are showing reduced levels of regret about their mortgages.
- Homeowners have not become more worried about their ability to weather a downturn in the housing market. However, they show a small reduction in confidence about the impact of higher interest rates.
- There is still a high degree of confidence that real estate is a good long-term investment.
- There has been a small reduction in the opinion that mortgages are “good debt.”
- Not surprisingly, there has been a downshift in confidence about the economic outlook. However, it might be surprising that the degree of confidence is almost exactly at the neutral level.
- There is now more confidence that this is a good time to buy a home or condominium.
- There has been a big downshift in expectations about growth of house prices, but the average score given is still above the neutral level, meaning that there are expectations that prices will continue to rise, just not as rapidly as in the past.
- Canadians continue to see homeownership as primarily a place to live, and secondarily as an investment. In the COVID-19 period, the opinion has not budged: Homeownership is 75 per cent about the housing and 25 per cent about the “investment” aspect.
- Very few Canadians regret becoming homeowners and that opinion has not changed.
“Our intention is to conduct the same survey three more times, in six-week increments, to track any changes in sentiment,” Taylor says. “It will be interesting to see how consumer attitudes may change with the competing pressures of the evolving pandemic emergency, economies reopening and mortgage deferral programs expiring.”
Dunning says, “One of the reasons we look at economic trends is that, most of the time, the recent past gives us reasonably reliable clues about what might happen in the near future. That is not the case in these extremely abnormal times as the COVID-19 emergency has resulted in extremely volatile shifts in the Canadian housing market.”
The report says that homeowners and buyers continue to exercise caution in their purchasing decisions and have made appropriate adjustments to home buying plans. Heightened economic anxiety has tempered expectations about the pace of growth in the value of a home. Despite this, there is more confidence that now is the right time to buy a home or condominium.
“A large majority of mortgage holders (72 per cent) do not foresee any difficulty in making ongoing mortgage payments,” says Taylor. “There is a quite small minority (five per cent) of mortgage holders who expect that they will have a lot of difficulty with future mortgage payments. Yet, hundreds of thousands of Canadians have joined the mortgage deferral program, because they are uncertain about their future situations, and they want to have as much flexibility as possible.
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