At first glance, Canadian homebuyers are doing better today than they were one year ago: Compared to 2020, when home seekers were crippled by uncertainty and health concerns, those who are currently looking to buy a home are less worried about their safety and finances. However, this is just a façade.
Home prices are at an all-time high and rising; inventory is at a record-low and dropping; and unwavering demand keeps the bidding wars going. How does this impact homebuyers? A little more than a year into a draining pandemic, the light at the end of their homeownership tunnel is dimming.
According to our most recent findings, Canadians want to buy a home now more than ever, buy their hopes of actually finding one are plummeting. For instance, despite the fact that 38% of respondents in our homebuyer survey stated that they were determined to buy as soon as possible, 44% didn’t know when they would actually be able to do so.
Here are more key findings from the 2021 Homebuyer Survey:
- Although worries about the number of properties available for sale and bidding practices were up, more than half of respondents (51%) stated that they had no particular concerns when it came to homebuying.
- Moreover, 61% were ready to give up the changes in their homebuying process that had been brought about by Covid-19.
- Canadians want to resume in-person viewings: Interest in photos and virtual tours dropped from 57% last year to 29% in 2021.
- This year, 38% of survey respondents — up from 12% in 2020 — stated that they wanted to buy as soon as they found the right property.
- However, when considering the time frame, home seekers seemed increasingly disheartened: Only 14% were hoping to buy within six months, down from 31% last year. What’s more, the share of undecided home seekers went from 27% to a whopping 44% of respondents.
“By the time I save up enough for a down payment the overall costs rise up beyond my reach. It’s a constant game of cat and mouse.”
– Survey respondent
As one respondent stated, the current market conditions make many home seekers feel like they are trapped in a “game of cat and mouse.” They can’t keep up with the price increases and the bidding war frenzy.
Buying a house is never easy, but this record-setting housing market has both buyers and sellers baffled. Last year many buyers put everything on hold because of the pandemic. However, being cooped up at home for weeks and months at a time has triggered an unprecedented race for space. Whether they want a balcony or a terrace; a backyard or a pool; an extra bedroom or a whole property by the lake, the common denominator in Canadians’ decision to buy and move is more space.
In 2020, only 12% of home seekers were still ready to buy despite the many unknowns. Conversely, in 2021 a whopping 38% of survey respondents said they were determined to buy as soon as they found the right property. Specifically, 4% said they were looking for more spacious homes and 15% stated they wanted more affordable homes.
“We can no longer afford a house in less than five years. Now it could be ten or more.”
– Survey respondent
This determination is precisely what keeps the fire burning under the already red-hot housing market. Increasing demand pushes prices higher and higher and the pandemic-induced stratospheric costs of development are not helping either. Plus, inventory is tighter than ever at a time when demand is higher than ever, which is why home seekers’ hopes and plans are slowly starting to crumble.
According to the survey, although they were determined to buy, 44% of respondents said they didn’t know when they would be able to do so. Similarly, a total of 17% stated that an appropriate buying time-frame for them could be in the next five years or even longer.
“[Properties] are snapped up as soon as they are posted. The market is too fast for my liking; [it] feels like a feeding frenzy. I will not buy under such pressure.”
Meanwhile, health and safety, and even financial stability concerns were all down compared to the beginning of the pandemic. In fact, the only aspect that keeps buyers up at night seems to be low supply: This year, 17% of home seekers — up from 13% in 2020 — were concerned they wouldn’t have enough properties to choose from.
Many respondents mentioned the “lack of available properties in [their] area,” the “limited supply of homes with most going over asking [price]” and the markets in their area getting “more and more competitive.”
“Despite every article at the beginning of the pandemic claiming the housing market would crash, it had surged unbelievably. Houses are selling way over asking and I’m having trouble finding a house in my price range.”
Although low supply was the main concern of survey respondents, many were worried about the rapidly rising prices as well. More than half (52%) noticed an increase in prices in their area of interest and 53% stated that they couldn’t keep up with the fast-changing price tags.
Likewise, regarding whether they could keep up with the escalating prices and what they thought about the current market conditions, many respondents stated that they felt dispirited or ready to give up. Some had even put their plans on hold.
Four survey respondents elaborated:
“We can keep up with the house price increases, but not for much longer. We are very close to hitting our maximum.”
“Prices are ridiculous. Too many out of town people coming and buying it up. I’ll wait for the market to cool after Covid-19 and see what happens in the next two years.”
“I am not willing to pay the current inflated rates, which I believe will change.”
“I won’t get into a crazy bidding war.”
Referring to strategies and plans for the future, respondents seemed eager to get back to normal — 61% of all survey respondents stated that they made no significant changes to their buying process and 53% didn’t plan on making any changes going forward, either.
Homebuyers also stated that they wanted to resume pre-pandemic practices. For instance, interest in pictures and online tours lost ground (falling from 57% last year to 29% this year) and interest in going to viewings and open house events increased to 10% from 4% last year.
Here’s what five of the survey respondents had to say about their initial expectations and how the pandemic actually affected their homebuying decisions and process:
“I live in a small town in Ontario right now and the prices for a house in my home town are ridiculous. There is no home under $450,000 and people coming up from the city are getting into bidding wars and paying over 70% more than asking price. That’s just in my town; it’s even worse in more populated areas. So, my boyfriend and I are looking to move out east.”
“Numerous properties being bought and then immediately relisted. Increased bidding wars… As a first-time buyer you are forced out of this market.”
“I hate having to compete with rich people bidding more than I can while making offers. I hate that we have to rush to make offers. I hate that to get our offer accepted, we have to limit the conditions, such as house inspection.”
“It seems whatever inventory is available has SKYROCKETED. And people are jumping at the limited inventory and paying WAY HIGHER for what the houses are worth. Also noticing that sellers are holding off on offers, trying to get even more money. And people are paying $100,000+ ABOVE listing. It is totally out of control, insane and just drives out an average buyer who just wants a decent and affordable place to live.”
“Buyers are paying too much and not thinking ahead when interest rates rise if they will be able to maintain mortgage payments, or if they need to sell, they may be in a negative position financially.”
What do the real estate agents think?
On the flipside, real estate agents revealed details about the other side of the buying process, and the pandemic has had a clear effect on their activity, as well. In particular, most agents talked about the move online, their increased efforts to find homes for their clients and the challenges that made last year harder — but sometimes more rewarding — than previous years.
Most of the challenges that the agents mentioned were related to contracting the disease and being forced to put their business on hold, but they also mentioned the taxing effort to move most of their activity online:
“The major issue for my business is that I actually contracted the virus and wasn’t able to continue working like all other realtors. I had to hire another Realtor to do my physical showings as I was unable to.”
“I’m adding virtual tours by phone of some homes — people are buying sight unseen, so I try to make sure they are aware of every aspect of a home with a tour. Bought equipment to make working at home easier/convenient.”
At the same time, most agents (65%) also reported an increase in buyers’ interest and activity and only 27% noticed a drop in activity. Consequently, the majority of agents reported an increase in business opportunities and revenues as well. Specifically, half of the surveyed agents (50%) stated that they saw a jump in revenues of at least 25%, with 4% of respondents reporting a gain of more than 75%.
As for what the future might hold, agents’ opinions varied:
“Home-centered learning and working will influence buyers for years to come. Buyers will look for flexibility in space usage; access to, and types of, nearby amenities will be important. Some buyers will buy a larger home, or the flex room will become an office. The finished basement may not be just a family or rec room as home schooling and working become more common.”
“I think the virtual tours, photos and information about the property will become even more important when buying or selling.”
“People will prefer buying more freehold properties instead on condo/apartments.”
“[I believe there will be] way more buyers to smaller communities due to work from home.”
However, among the new business protocols and hopes and predictions for a virtual future, one answer stood out. When asked about the more permanent changes this pandemic might bring, one agent had a simple, eye-opening reply: “Hopefully kindness. Takes into perspective what’s important in life.”
- Surveys were posted on the Point2 Homes real estate marketplace between March 15 and April 5, 2021. There were 2637 usable answers. All percentages were rounded.
- Current survey data was compared with the results of the 2020 Homebuyers’ Survey.
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