That may explain why first timers are staying out of the market in increasing numbers, at least according to a new RE/MAX survey.
The survey suggests that only 30% of prospective buyers over the next two years will be FTBs. If that doesn’t seem unusual, consider that 43% of buyers were first timers as recently as 2009.
The trend in FTB activity has steadily fallen for more than three years.
Chart source: RE/MAX, 2013
“There’s no question that first-time buyers are experiencing a period of readjustment,” says Gurinder Sandhu, EVP and Regional Director of RE/MAX Ontario-Atlantic Canada. “…Affordability took a hit in 2012.”
That affordability factor has been hurt by more than just mortgage rules. Another reality delaying FTB purchases is that home prices in some areas have risen at over double the pace of income. That’s left young people with fewer options than older buyers with more resources.
36% of intended home buyers earn less than $50,000.
40% of purchasers aged 18-34 intend on putting down 20% or more on their home.
7% of buyers expect to make a down payment of 5%.
14% plan to put down 10%.
Of all buyers putting down 30% or more, 45% were aged 55+.
Just 1% of those surveyed intended to spend over $1 million on their home.
(Killing high-ratiomortgage insurance on homes over $1 million was a politically easy target for Jim Flaherty. Yet, of the four mortgage rule changes last July, this one will have the least practical effect on reducing insurer and governmental risk.)
Survey details: RE/MAX says that this national survey, hosted on the Angus Reid Forum in December, was conducted among 1,109 prospective purchasers who intend to buy within the next 24 months.
Rob McLister, CMT
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