By: Sheila O’Hearn, Zoocasa

Affordability in the housing market continues to be a hot topic, as home prices reach record highs in major cities, such as Vancouver and Toronto real estate markets. Combined with policy changes aimed at tightening mortgage qualifications, home ownership has become more challenging for first-time buyers, move-up buyers and downsizers.

In addition, concerns about foreign and domestic speculative investment activity driving demand and price growth continue to persist. These issues appear to have Canadians feeling a mix of emotions towards the housing market.

The 2017 Zoocasa Housing Sentiments and Trends Report, based on an online survey of more than 1,100 Canadians from February 2017 to March 2017, provides insights into perceived obstacles to ownership, attitudes towards foreign buyer tax, and stress factors when purchasing a home. This report also includes information from the Canadian Real Estate Association (CREA).

Canadians split on housing market confidence

Increased buyer competition and affordability challenges, compounded with warnings of market “bubble” conditions have Canadians feeling split on their outlook of the housing market.

So, how confident are respondents about Canada’s real estate market? The survey shows:

• 34 per cent Confident
• 37 per cent Not Sure
• 29 per cent Not Confident

Is owning a home still an important life milestone? Despite varying confidence levels in the market, the overwhelming majority of Canadians indicated homeownership is still an important rite of passage. Of respondents, 83 per cent agreed that ownership is a major life milestone, while only 8 per cent felt it wasn’t important, and another 8 per cent weren’t sure.

Canadian support of foreign buyer tax

Foreign home ownership has been a hot topic in Canadian real estate news. Over two-thirds of respondents supported a foreign buyer tax − even those who didn’t feel foreign buyers have driven up prices in their city.

Sixty-nine per cent of Canadians supported having a foreign buyer tax. Province by province, respondents illustrated the following:

• 75 per cent British Columbia
• 63 per cent Saskatchewan & Manitoba
• 55 per cent Alberta
• 70 per cent Ontario
• 77 per cent Quebec
• 56 per cent Atlantic Region

Compare to 61 per cent of Canadians surveyed, who felt foreign buyers are driving up real estate prices in their city. Province by province, respondents surveyed showed the following:

• 74 per cent British Columbia
• 39 per cent Saskatchewan & Manitoba
• 39 per cent Alberta
• 66 per cent Ontario
• 50 per cent Quebec
• 31 per cent      Atlantic Region

Respondents from British Columbia and Ontario were in above-average agreement that foreign buyers are driving up real estate prices in their city. Out of respondents from BC and ON, 74 per cent and 66 per cent, respectively, felt that foreign buyers have contributed to increased prices, and similar portions of respondents from those provinces supported a foreign tax.

Interestingly, even respondents from regions who didn’t feel that foreign buyers were driving up prices in their city, supported implementing a foreign buyer tax. Only 38 per cent of Albertans felt foreign buyers were impacting property prices; nevertheless, 63 per cent still supported a foreign buyer tax.

Common hurdles to homeownership

Both first-time homebuyers and current owners aspiring to buy again indicated that affordability is a barrier to their future home-purchasing goals.

Respondents identified that two of the top three obstacles to buying their next property were related to affordability. Out of potential buyers, 54 per cent cited rising real estate prices as a challenge, and 35 per cent indicated that the concern was saving for a down payment.

Respondents, surveyed, identified the following factors as obstacles for purchasing property:

• 54 per cent Rising real estate prices
• 39 per cent Finding the right property
• 35 per cent Saving for a down payment
• 19 per cent Finding the right neighbourhood
• 18 per cent Employment situation
• 12 per cent Paying for closing costs
• 10 per cent Debt or bankruptcy
• 3 per cent Finding the right realtor

Who is investing in Canadian real estate?

The topic of real estate investment has been hotly debated, and it has been suggested that speculative activity has contributed to unsustainable demand and price growth in Canada’s largest housing markets.

The Zoocasa survey shows that 67 per cent of respondents agreed that real estate is a better investment than a high-interest savings account, and 60 per cent agreed that real estate is a better investment than the stock market, while 25 per cent agreed that real estate is a better investment than an MBA or post-graduate degree.

Twelve per cent of the respondents own at least one investment property, and over one-tenth of respondents own one or more investment properties, with the majority of those investors carrying just a single additional property. One-fifth own two homes for investment purposes, while a small fraction (13 per cent) reported owning three or more properties.

Household income of investors

Not surprising, higher-income households are more likely to own investment homes, as increased cash flow is generally needed to qualify for additional mortgages and finance a down-payment, especially since the financial barrier to enter the market has increased in Canada’s urban centres.

Respondents who own investment property by household income illustrated the following:

• 4 per cent less than $20,000
• 4 per cent $20,000 to $34,999
• 9 per cent $35,000 to $49,999
• 10 per cent $50,000 to $74,999
• 15 per cent $75,000 to $99,999
• 28 per cent $100,000 to $149,999
• 12 per cent $150,000 to $199,999
• 19 per cent – $200,000 or more

Real estate investment seems to require a team approach. A large majority of investment property owners reported being married or in a common-law relationship, and the Canadian median household income was $78,870.

You may also be interested in: Toronto Real Estate: Asking Price vs. Selling Price

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Writer: Sheila O’Hearn 

Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.