Considerable concern has been raised here and in other circles about the affordability of home purchases and the first-time buyer.
It is no secret the price of housing across the country has increased at a rate greater than the average income over the same period. Prices in populous centres such as Toronto, Vancouver and Calgary have reached previously unthinkable levels. However, home ownership still remains the goal of most Canadians and first-time buyers make up a significant portion of that market.
The average age of the head of a first-time buyer household is 34, with an average total income of $76,000 and an average purchase price of $268,000. This is $35,000 less than the overall average selling price of all homes in Canada.
I found it interesting the down payment when purchasing a new home varied considerably depending on the purchase price of the home. Slightly more than 50 per cent of first-time buyers who purchased a home for less than $200,000 put down the obligatory five per cent. On the other hand, more than half of first-time buyers purchasing homes for more than $350,000 submitted a down payment exceeding 20 per cent.
More than 80 per cent of first-time buyers use non-RRSP savings and investments for their down payment. Just more than 40 per cent cash in RRSP savings and other investments. Approximately 30 per cent secure gifts and private loans, while only five per cent realize this money through inheritance. Finally, approximately 15 per cent use a line of credit or term-loan borrowing for a down payment.
There are 2.4 million renter households under the age of 50 in Canada. Of those, more than 80 per cent indicate they would like to own their own home someday. Most are in the process of saving for a home, shopping for one or waiting until they qualify for a mortgage so they can buy a home. Of course, their financial circumstances vary, especially depending upon where they live in Canada.
As seen here, the first-time buyer is a significant segment of our marketplace. The goal of home ownership runs across the country in all demographics and all efforts should be made to assist this group. Whether it is a longer mortgage-amortization period, a reduction in fees and transfer costs or more assistance from financial institutions, home ownership is definitely part of the Canadian dream.
Mike Moore is president of the Manitoba Home Builders' Association.
