TORONTO, ONTARIO--(Marketwired - Mar 18, 2014) - First-time home buyers have increased their budget to an average of $316,100 - up from $300,000 in 2013 - according to the BMO 2014 First-Time Home Buyers Report released today. However, the average down payment percentage has remained unchanged from last year at 16 per cent ($50,576).
The report, conducted by Pollara, also revealed the average expected spend by major city:
|Average Spend by Major City|
|Average Spend on First Home||Toronto||Montreal||Calgary||Vancouver|
The report also found:
- On average, one third of first timers (30 per cent) expects parents or family to assist in their purchase. However, this percentage rises to 40 per cent in Montreal and Vancouver.
- The majority (61 per cent) have made cutbacks to their lifestyle in order to save for their first home.
- Six in ten (60 per cent) say their home-buying timeline has been delayed, with 39 per cent citing rising real estate prices as the main reason for delay.
"Among the many considerations for those trying to get a foot in the door of the real estate market for the first time, the most important of all is building a substantial down payment," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "Buying a home is one of the most important financial decisions one can make, and typically represents the largest form of savings for Canadian households. It's crucial that those planning to buy are well prepared and have considered all options available to them."
Ms. Parsons added that it isn't surprising to see real estate prices causing delays in this demographic's buying timeline. "In a real estate market such as Canada's, where prices have been consistently rising, those who put off their purchase need to ensure that the rate at which they are saving outpaces price gains. Otherwise, they may find themselves further behind in the long run."
According to BMO Economics, rising prices in urban markets are causing many first-time buyers to adjust their buying plans.
"High prices in a few major cities, and the fact that prices are outrunning incomes in Toronto, are turning off some first-time buyers, while forcing others to go deeper into debt, tap their parents for hefty down payments, and opt for a condo rather than a detached house," said Sal Guatieri, Senior Economist, BMO Capital Markets.
One Third of First-Time Buyers Sets a Breakable Budget
The report also revealed that 60 per cent of first-time buyers plan to set a fixed budget with a maximum amount, and will not deviate from their plan. However, one third of respondents are willing to break their set budget for the right home. Ms. Parsons noted that first timers would be wise to establish price boundaries before setting out on the home buying journey.
"To help ensure first-time buyers don't spend beyond their means, they need to be fully prepared to purchase the right house, at the right price. Getting pre-approved gives buyers the opportunity to consider multiple options, during a time-sensitive decision period," Ms. Parsons suggested.
First-Time Home Buyers Price Range by Province
|Average Spend by Province|
|Average Spend on First Home||ATL||QC||ON||MB/SK||AB||BC|
First-Time Home Buyers Price Range Compared to Average Home Price Per Region
|Average House Price by Province* (as of February 2014)|
|Average Spend on First Home||NFLD||PEI||NS||NB||QC||ON||MB||SK||AB||BC|
The BMO First Time Home Buyers Report was conducted by Pollara. Survey results cited in this report are from online interviews with a random sample of 513 First Time Canadians Home Buyers18 years of age and over, conducted between January 24th and March 6th, 2014. As a guideline, a probability sample of this size would yield results accurate to ± 4.3 per cent, 19 times out of 20. Data has been weighted by region, gender, and age, based on the most recent Census figures, so that it is representative of all adult Canadians.
*Average house price not seasonally adjusted
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group has total assets of $593 billion and more than 45,500 employees as at January 31, 2014.