This past Tuesday, the Bank of Montreal released its BMO Housing Confidence Report. In it was revealed that residents of Vancouver, Calgary and Greater Toronto were the most apt to buy property within the next five years. Greater Toronto had the greatest percentage of intended buyers, 57 percent, followed by Calgary at 62 percent and Vancouver at 53 percent. The average across Canada was at 46 percent.
Also indicated in the study was that homeowners across Canada expected home prices to increase by two percent over the next 12 months. In Calgary that increase is expected to be a bit higher, at 2.4 percent.
BMO Bank of Montreal’s Martin Nel noted that if 46 percent of the nation has their sights set on homeownership within that five years it means that consumer confidence is up. Nel, the banks vice-president of investments and lending, noted that most Canadians feel that real estate is still a solid investment. Yet that idea is muted somewhat by the modest increases in the home prices and the tighter mortgage regulations.
Those house prices, along with increasing debt loads carried by many households are making many Canadians vulnerable to the whims of financial volatility. Some will be in dire straits if interest rates increase to even moderate rates. Sal Guateri, also with BMO Capital Markets, noted that the interest rates are expected to remain at their low point for some time. That along with the recent change in mortgage rules should help to temper the fears concerning the household debt load.
Also in the BMO Housing Confidence Report it was found that 18 percent of Canadians are considering downsizing their homes. At the same time, another 18 percent were considering going in the opposite direction and buying “up.” About ten percent will end up selling their property and finding rental property, perhaps in a retirement community, or move in with their families. Some 21 percent are planning on buying income property or a second, recreational property.
Also, some 57 percent showed they were familiar with the most recent mortgage rules changes, and of those 22 percent are rethinking their plans to buy property within five years because of those tighter rules. Nearly 29 percent are still considering buying, but will most likely buy a smaller, less expensive property.
On the national front, the study showed that if the price of property increased by five percent or more, that 46 percent of interested homebuyers would decrease to 36 percent. But, in Alberta, that much of a price increase would only cause about one percent of those potential buyers to change their minds. If, however, the increase was ten percent or more, the percentage of potential buyers in Alberta would drop to 42 percent.