Fewer Buyers, Bigger Budgets with Canadian Real Estate

Published September 3, 2018 by Real Estate Leads

AdobeStock_104716085Recent data released by the Canada Mortgage and Housing Corporation confirms what has been said by most in-the-know about real estate in Canada – there were fewer new home buyers last year. Accordingly, similar numbers showed mortgages to new owners declined significantly as well. While the huge decline was indeed noteworthy, what is more worthy of focus for those of us working as real estate professionals is the fact that the average balance of these new mortgages inflated. New homebuyers are taking out fewer mortgages, but the ones that are being taken are much larger ones. This especially true for the suburbs of popular urban centres like Vancouver and Toronto.

Anything that changes the dynamic of what makes up the bulk of your clientele will be important for a real estate agent to understand and take into consideration when prospecting for clients. Here at Real Estate Leads, our online real estate lead generation system harnesses the power of the Internet to put more qualified leads into your hands and then allowing you to do what you do best in order to secure them as clients. With that market ‘flat’ as it is currently considered to be nationwide, this is more important than ever.

New Owners with New Buyer Realities

The CMHC’s new owner data is very interesting to take into consideration. A mortgage to a new owner is when the borrower takes out a new mortgage while not having one in the previous quarter. These are not first-time buyers exclusively, but a lot of first-time buyers are included.

As mentioned, the number of new owners went down across the country last year:

  • 959,074 mortgages to new owners across Canada in 2017, a decline of 6.5% from the year before
  • Kitchener-Cambridge-Waterloo is the only market with over 2,500 new owners to record any growth
  • 5,795 mortgages issued to new owners in 2017, an increase of 2.69% from the year before

None of this reflects huge growth considering the total size of the market, but it’s growth nonetheless. On the opposite end of thing, the country’s largest markets saw large declines in growth:

  • Toronto saw 68,176 mortgages taken on by new owners in 2017, a decline of 8.14% from the year before
  • Montreal had 38,651 mortgages to new owners, a drop of 3.4%
  • Vancouver had 30,336 mortgages to new owners, a walloping decline of 16.31%

Note that all 3 of these markets reported declines in loans to new owners for the previous year (2017) as well.

New Owners with Larger Mortgages

It would seem to be natural that those declines in numbers would correspond with smaller mortgages, but it the opposite has occurred. For example, Oshawa’s average mortgage to new owners was $364,989 in 2017, a jump of16.59% and the largest increase in the country. The Kitchener-Cambridge-Waterloo region had new owners assuming mortgages of $310,153, on average, up 15.69%. Barrie saw the average new owner mortgage hit $321,194, up 13.97%. Interesting to note that all of these markets were in Southern Ontario.

More conservative changes were seen in the country’s largest markets, with the exception of Toronto. That city’s average mortgage to new owners moved to $472,954 in 2017, a jump of 12.57% from the previous year. Montreal’s average mortgage to new owners reached $242,836, up 4.16% from 2017. Vancouver’s $473,382 was down 2.97% from the year before. The previous year saw increases for all 3 of these markets.

New owners aren’t typically considered to be a driving force for prices, but these numbers indicate they might well be. The average mortgage size taken out by new buyers has really ballooned, and not in markets with perceived density issues. Instead, the largest gains were in low density suburbs. This supports the belief that buyers have been maxing their credit instead of weighing purchasing decisions against any sort of fundamental pricing factors.

As always, a realtors who’s really in the know about every aspect of the local market and national housing and real estate trends is the one who’ll be regarded as the true professional. Sign up for Real Estate Leads here and receive a monthly quota of qualified, online generated buyer and seller leads delivered to you exclusively and for your own protected area of any city or town in Canada. It’s a proven effective way to generate more opportunities to turn leads into clients and further grow your real estate business.