Alberta first-time home buyers most optimistic in the country

First-time home buyers may believe that market conditions are favourable, but it's important to make sure that carrying costs are sustainable

First-time home buyers generally have a positive outlook on the housing market with Albertans the most optimistic, according to a new survey released by BMO on Tuesday.

Hassan Pirnia
Hassan Pirnia
Bank of Montreal

“While first-time home buyers believe that market conditions are favourable for buyers, it’s important to make sure that carrying the costs are sustainable,” said Hassan Pirnia, Head, Personal Lending and Home Financing Products, BMO Bank of Montreal, in a statement. 

“What we recommend is coming in and speaking with a mortgage specialist to come up with a plan that will put the buyer in a position to comfortably afford a home and help them understand the criteria for qualifying for the new incentive.”

The survey, conducted by Pollara Strategic Insights, found:

  • Across Canada, first-time buyers in Alberta are the most optimistic with over 50 per cent believing it is a good time to buy;
  • Home buyers in British Columbia and the Prairies are also fairly optimistic about the market (42 per cent in both regions);
  • Not all buyers share this same sentiment. Only a third of prospective buyers in Ontario believe now is the right time to purchase a home, and under 40 per cent of first-time buyers in Quebec believe the current market favours buyers; and 
  • Almost half (45 per cent) of new home buyers are looking to purchase in one of Canada’s hotter markets: Toronto, Vancouver, or Montreal.

BMO Economics says the housing market is showing signs of firming again and eight out of 11 of Canada’s larger cities are currently either buyer’s markets or balanced: Vancouver, Victoria, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, and Toronto. BMO also said the First-Time Home Buyer incentive is expected to provide a moderate lift to sales. 

“Taken together, it is creating an environment of stronger consumer demand for housing,” said BMO.

Other survey findings include:

  • 13 per cent of first-time home buyers are planning to buy a property which exceeds more than 30 per cent of their income;
  • Close to 40 per cent of first-time buyers are willing to make sacrifices in other areas of their lives to buy a more expensive home;
  • First-time buyers are also optimistic when it comes to the federal government’s First-Time Home Buyers Incentive. Of those surveyed, 86 per cent believe that the incentive will be useful towards achieving their home ownership goals; and 
  • Older millennials – those currently in their 30s – are one of the groups to find the new incentive very useful (50 per cent).

“With a five per cent down payment as the minimum, over a quarter (26 percent) of first-time home buyers say having enough money to meet this threshold will be a major challenge, while 39 per cent indicate it will be a minor challenge,” said BMO.

“The report also pointed out that prospective home buyers range in financial preparedness. Only 14 per cent of new home buyers are already in a position to make a down payment, and over half (55 per cent) say they expect to have the money for a down payment in the next two years. As well, most first-time buyers will be carrying debt into homeownership. Just over one third of new home buyers (38 per cent) say they will be debt free before they purchase their first home.”

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