home buying

Home-buying intent heats up during second wave

Tuesday, February 16, 2021

More people plan on buying a home compared to last summer, suggests newly released data analyzing housing expectations across Canada. The fifth part of the Rapidly Evolving Expectations in the Housing Industry survey, written by Mortgage Professionals Canada’s (MPC) Chief Economist Will Dunning, looked at 1,000 Canadians, including home owners with mortgages, renters, and people who live with their parents. This survey took place in the thick of the second wave, between January 14 to 25, 2021.

Compared to the first part of this survey, which began last summer, the desire for non-owners to buy in the next few years has grown incrementally from 14 per cent to 27 per cent. A disclaimer of the survey, however, acknowledges this data is difficult to interpret; ‘not everyone who expects to buy has realistic prospects of actually buying,’ it states. Then pile on employment uncertainty, unaccessible financing arising from mortgage stress tests, and other factors.

“While prices are now rising rapidly in many communities across Canada, extremely low interest rates have more than offset the effects of higher prices, said Dunning. “When I did the calculations, I was surprised to find that affordability has actually improved in the past few months. The consequence is that interest in buying is currently far in excess of the available supply, and the imbalance between demand and supply is resulting in very rapid price growth across Canada. Clearly, not everyone who wants to buy a home will be able to.”

As an alternative to economic forecasting, which is ‘challenging and uncertain,’ these particular surveys have created some new data on shifting attitudes and expectations about the housing market, to help interpret evolving market conditions, and possibly provide clues about future changes.

“The data from our survey provides an explanation for what’s happening in the housing market: Canadians in very large numbers are re-organizing their housing situations,” Dunning added. “It is possible, but far from being guaranteed, that this active process of re-organization could last for quite some time.”

The report comments on data from the federal housing agency, Canada Mortgage and Housing Corporation (CMHC), which shows that the rental sector is also being re-organized. Vacancies have increased for apartments, as tenants are tending to move towards low-rise dwellings; however, that data only arrives annually. The report, notes that, for other major economic activities of similar scale, data is produced monthly. Producing the CMHC rental market data more frequently, at least quarterly, would be immediately useful to governments, the private sector, and consumers, all of whom must make important decisions quickly through COVID-19 and beyond.

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