CMHC's First-Time Homebuyers Survey

The Canadian Mortgage and Housing Corporation (CMHC) has just released their first time Buyer survey. Certainly some interesting thoughts and findings in there further to my Blog regarding the slowing process of mortgage financing!

The survey points out that first-time homebuyers typically have lower incomes than other homebuyers. As a matter of fact, 65% of new buyers have household incomes of less than $90k and one in five of those have a total household income of under $45k. This would strengthen my position regarding the fact that the vanishing inventory of more affordable homes (under $400k) will be a major contributor of how the market proceeds over the next few weeks, months and years. If there are fewer homes available in the range these new homebuyers can afford, it will certainly slow the market significantly. If homes are not affordable for these buyers, the opportunity for other homebuyers to sell their homes and move up will also slow down.

Another finding within the survey points toward the fact that new homebuyers typically take about three months longer to plan their purchase than repeat buyers. The median time frame for planning is about ten months. If we see further spread between what these new home buyers can afford and the actual pricing of homes, we could see that planning time period expand further as new homebuyers have to save longer for a significant down payment.

What I found especially interesting in the survey is the fact that 70% of first time homebuyers purchase single family homes, whereas only 28% purchased apartment or townhouse styled condos. Perhaps there will be a shift in this trend as single family homes become further out of reach financially and new homebuyers will need to lower their expectations as to what they want in a new home. This will certainly affect the quantity of sales of single family detached homes, possibly dragging prices downward.

We certainly need to keep a close eye on this spread between affordability and market value for new home buyers and repeat buyers alike. Keep in mind that half of repeat buyers have a household income of $90k or less as well. As financiers and Government initiatives tighten the process for obtaining mortgages further, this will put additional pressure on the market where affordable homes are becoming further and farther between.