Yahoo Finance First-time buyers worried about down payments falling short: Royal LePage
The survey finds one in three buyers had parents chip in for their down payment
A new Royal LePage survey finds more and more first-time homebuyers are worried their down payments will fall short, causing them to lose out on a home they love.
Sixty-seven per cent of buyers who recently bought their first home had worried financial constraints would affect their purchase, up from 62 per cent in 2021 and 57 per cent in 2019, according to the survey.
“That first transaction is the most difficult, and in today’s environment, first-time buyers are faced with large price tags, high carrying costs and the added challenge of qualifying for lending at higher rates due to the stress test,” Phil Soper, president and CEO of Royal LePage, said in a release on Thursday.
Regionally, buyers in Canada’s more expensive markets were more likely to voice their concerns about their down payment being insufficient. Notably, however, buyers in the Calgary and Atlantic Canada housing markets, which are typically viewed as more affordable, were significantly more worried about financial constraints.
Calgary, Atlantic provinces see major sentiment shift
Sixty-nine per cent of Greater Calgary respondents were worried about the size of their down payments, up from just 42 per cent in 2021, the data show. Meanwhile, 65 per cent of Atlantic Canada buyers said they were concerned they'd lose out on a home they wanted, up from 49 per cent two years ago.
Both of those regions have seen large population influxes, partly because of their relatively affordable homes, which has in turn pushed up prices.
Royal LePage says young people in Calgary are having a tough time competing in bidding wars for entry-level properties. On the east coast, buyers are making compromises such as buying smaller condos or townhouses instead of a detached home, the brokerage says.
Bank of Mom and Dad hold the key for many
As housing affordability has steadily declined, tapping family members for financial help has been crucial to those hoping to climb the property ladder.
Thirty-five per cent of first-time buyers nationwide had assistance from parents or relatives to boost their down payment, the survey found.
One in four reported they had mom and dad pitching in every month to help pay the mortgage.
“Without equity to leverage, entering the housing market can be especially difficult, particularly in our major cities, where home prices are most often highest. Many first-time buyers have to rely on a financial boost, or at least a loan, from parents or family to help them buy their first property,” Soper said.
The survey consisted of online interviews between Feb. 22 and Mar. 27 with 2,223 Canadians aged 25-45, who had either bought their first home in the previous two years or planned to buy in the next two years.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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