Genworth HEW FTHO Environics Presentation - David for May 9.pptx … · 2019-05-16 · Got a new job/raise/bonus Birth of a child Spoke to a professional who showed that I could afford

G E N W O R T H C A N A D A H O M E O W N E R S H I P E D U C A T I O N W E E K 2 0 1 9

Methodology

2

Background

The purpose of this research is to gain deeper insights into the needs, motivations and financial decisions of Canadian first-time home buyers for National Homeownership Education Week.

Methodology

A total of 1,893 interviews with Canadians aged 25-40 who had purchased their first home within the prior two years.

Online interviewing was completed between February 15 and March 15, 2019. Quotas were set to oversample in urban regions with weighting to bring them into overall national proportions.

Total

Van-couverCMA

B.C. xGVA

CalgaryCMA AB xCal

Man./ Sask.

TorontoCMA

Ont. xGTA

MontrealCMA

QC xMont. Atlantic

Unweighted 1893 174 108 138 153 156 279 316 151 266 152

Weighted 1893 133 118 75 144 128 320 406 221 220 126

Weighted Pct. 100% 7% 6% 4% 8% 7% 17% 21% 12% 12% 7%

©2019 Genworth MI Canada Inc. All rights reserved.

Macro Context

3


11%

2015

5%

2019

Incidence of First-Time Buyers among 25-40 year olds

4

??

8%

2017

Where are the missing first-time buyers?

Who made the hurdle?


Homeownership growth among 25-40 year-olds declines as aging Millennials top out

5

55% 58% 60%

0%

10%

20%

30%

40%

50%

60%

70%

2015 2017 2019

Home ownership: Millennials

(24-39)(22-37)(20-35)

Home ownership: 25-40 year-olds

71%64% 62%

0%

10%

20%

30%

40%

50%

60%

70%

2015 2017 2019

2015-2019 General Population research


Findings: Purchase Motivations

6


More are motivated to buy before further price increases; financial motivations rebound with greater confidence

7

Which of the following were motivations that led you to purchase a home rather than keep living where you were? Select all that apply

50%

45%

44%

42%

36%

30%

17%

16%

14%

12%

9%

8%

6%

49%

46%

45%

39%

32%

29%

15%

17%

11%

11%

7%

8%

4%

53%

47%

47%

44%

31%

32%

15%

19%

15%

11%

7%

8%

4%

2019

2017

2015

Key Differences:

Those in B.C. outside of Vancouver are more likely to believe owning a home is wiser financial decision than renting (62%) and that they wanted to buy a home before prices increased further (50%).

Those in Calgary are more likely to have saved enough for a down payment (57%).

Those in Ontario outside of Toronto are more likely to have wanted to buy before prices increased further (44%).

Those in Quebec outside of Montreal to have wanted to own the home they live in so they are in control (54%).

Believe owning a home is a wiser financial decision

Wanting to own the home so you are in control of it

Saved enough for a down payment

Became financially confident that I could afford it

Wanted to buy a home now before prices increased further

Disliked renting a home

Getting married/moving in together with partner

Got a new job/raise/bonus

Birth of a child

Spoke to a professional who showed that I could afford it

Received an inheritance or gift of large sum of money

Disliked living at parent’s home

Attended a home show to educate yourself on the process


95%

91%

90%

84%

81%

80%

77%

75%

74%

73%

67%

67%

65%

62%

50%

93%

89%

91%

82%

77%

77%

75%

72%

72%

70%

63%

65%

62%

55%

44%

94%

91%

90%

85%

79%

76%

77%

72%

71%

69%

63%

65%

63%

55%

39%

201920172015

While price remains the most important reason, more now cite the value as an investment; more value proximity to transit and work

8

Price

Safe neighbourhood

Size/Space of the home

Style/design of home

Its value as an investment/take advantage of rising real estate prices

Proximity to work

Reflective of type of neighbourhood you want to raise your kids in

Energy efficiency of home

Features/upgrades

Potential to renovate and resell

Energy efficiency of appliances in home

Proximity to shopping

Proximity to school

Proximity to public transit

Potential to rent out part or all of it

How important were each of the following as reasons for why you chose your current home?

Key Differences:

Those in Vancouver are more likely to cite proximity to shopping (79%), public transit (79%) and the potential to rent out some or all of it (66%).

Those in Calgary are more likely to cite the style/design of the home (91%), features and upgrades (81%), proximity to sopping (76%) and public transit (73%).

Those in Toronto are more likely to cite its value as an investment (88%), its potential to renovate and sell (74%) and the potential to rent out some or all of it (58%). Those in Toronto are also more likely to cite proximity to public transit (80%), shopping (74%), and schools (70%).

Those in Ontario outside of Toronto are more likely to cite it’s value as an investment (86%), price (98%), and energy efficiency of home (80%).

Those in Montreal are more likely to want the type of neighbourhood they could raise their kids in (84%), proximity to shopping (79%) and public transit (76%) and the ability to rent some or all of it (58%).


Just over six in ten first-time buyers feel housing prices will increase in the next 12 months

9

By how much do you expect housing prices will go up or down in the next 12 months?

62%

18%

7%

12%

63%

19%

6%

12%

62%

19%

6%

12%

Increase

Stay the same

Decrease

Don't know/notsure

2019

2017

2015

Key Differences:

Those more likely to believe home prices will increase include those in Toronto (71%) or BC outside of Vancouver (75%)

• Those more likely to expect prices to decrease include those in Calgary (24%) and Alberta outside of Calgary (17%), and those in Vancouver (12%)


Findings: What they paid

10


Growing shares of Condos

11

What kind of home did you purchase?

Key Differences:

Condominiums are more likely to be the home of choice in Vancouver (55%), Montreal (38%) and Toronto (29%).

Torontonians are also more likely to prefer townhomes (25%) and semi-detached homes (16%). Those in Montreal are also more likely to prefer semi-detached homes (19%).

Fully detached homes are preferred in Manitoba/Saskatchewan (71%), Ontario outside of Toronto (59%), Alberta outside of Calgary (59%), Quebec outside of Montreal (68%) and Atlantic Canada (69%).

50%

21%

16%

12%

54%

16%

18%

11%

55%

17%

15%

13%

Fully detached home

Condominium

Townhouse/row house

Duplex/semi-detached home 2019

2017

2015


Price compression as mean prices remain flat but medians rise; increase in proportion of down payment

12

To help us understand home prices and mortgage financing please indicate the total purchase price of your home, as well as the down payment you made.

2019 2017 2015

Price paid for your homeMean

Median$406$350

$402$310

$318$293

Total down payment for your home

Mean Median

$83$45

$76$35

$59$34

Size of the mortgageMean

Median$323$288

$326$254

$260$242

Down payment as pct. of the total cost of the home

Mean Median

17.9%14.0%

17.0%12.0%

16.9%12.0%

Proportion with high ratio mortgages

58% 63% 63%

$59 $76 $83

$260

$326 $323

2015 2017 2019

Down payment Mortgage

$318

$402 $406

Mean Prices ($000) Mean prices rise modestly but medians rise from $310k in 2017 to $350k in 2019.

Down payments as a proportion of home prices rise


Transaction Values – 2019

13

To help us understand home prices and mortgage financing please indicate the total purchase price of your home, as well as the down payment you made.

Mean Total

Van-

couver

B.C.

ex-Van. Calgary

Alberta

ex-Cal.

Man./

Sask. Toronto

Ontario

ex-Tor. Montreal

Quebec

ex-Mtl. Atlantic

Price paid for your home $406 $687 $428 $441 $364 $299 $623 $377 $320 $214 $247

Total down payment for your home $83 $187 $77 $91 $55 $42 $150 $79 $50 $31 $37

Size of the mortgage $323 $500 $351 $351 $309 $257 $473 $298 $271 $183 $211

Down payment as proportion of the total cost of the home

18% 26% 16% 20% 15% 12% 23% 20% 15% 14% 14%

MedianTotal

Van-

couver

B.C.

ex-Van. CalgaryAlberta

ex-Cal.

Man./

Sask. TorontoOntario

ex-Tor. MontrealQuebec

ex-Mtl. Atlantic

Price paid for your home $350 $576 $400 $415 $375 $280 $550 $365 $280 $205 $208

Total down payment for your home $45 $120 $41 $55 $30 $20 $100 $50 $25 $18 $20

Size of the mortgage $288 $422 $336 $345 $323 $245 $434 $291 $230 $171 $180


14% 21% 12% 16% 10% 8% 20% 18% 10% 10% 10%

Total

Van-

couver

B.C.

ex-Van. Calgary

Alberta

ex-Cal.

Man./

Sask. Toronto

Ontario

ex-Tor. Montreal

Quebec

ex-Mtl. Atlantic

High ratio mortgage 58% 34% 69% 58% 72% 78% 40% 52% 65% 71% 72%

Not high ratio mortgage 42% 66% 31% 42% 28% 22% 60% 48% 35% 29% 28%


Findings: Down payments

14


More say they got pre-approved for a mortgage before shopping for homes

15

58%

27%

13%

54%

30%

13%

62%

21%

15%

Before you started shopping forany homes

When you found your currenthome, but before you negotiated

its price

Not until you negotiated theprice of your current home and

had to obtain financing

2019

2017

2015

Key Differences:

Those in Toronto are more likely to say they did not get pre-approved until they negotiated the price of their home and had to obtain financing (18%)

Did you get pre-approved for a mortgage by your bank or mortgage lender… ?


Personal savings lead for down payments, with growing reliance on gifts/loans

16

From which of the following sources did you obtain the funds for your down payment? Select all that apply

68%

36%

28%

25%

13%

10%

6%

5%

3%

1%

65%

39%

29%

22%

12%

9%

4%

0%

3%

1%

69%

39%

24%

22%

9%

8%

5%

0%

1%

1%

Your own/partner’s savings/non-registered investments

Withdrawal from an RRSP (Home Buyer’s Plan)

Withdrawal from a TFSA (Tax-FreeSavings Account)

Gift from a family member

Loan from a family member

Line of credit/other financing

Wedding gift

Private Loan

Proceeds from the sale of aproperty by your co-purchaser

Income or sale of assets owned inthe country you immigrated from

2019

2017

2015

Key Differences:

Those in Toronto are more likely to have taken money from a TFSA (33%) or a loan from a family member (20%).

Those in Ontario outside of Toronto are more likely have relied on their own and/or their partners’ savings (74%).

Those in Quebec outside of Montreal are more likely to have made use of the RRSP Home Buyer’s Plan (48%).

37% vs.

32% in 201731% in 2015


Half of FTBs receive support from gifts, loans or low/no rent with differing impacts on prices

17

37%

32%

31%

Received gifts,loans from family

2019

2017

2015

14%

8%

3%

Did not pay rent athome

Paid rent belowmarket rates

Lived where didn'tpay rent

25%

Key Differences:

Half (52%) received support in the form of loans/gifts (37%) or low/no rent (25%). Fully 10% received both. 27% got neither.

Those in Toronto (46%), Vancouver (42%) and Calgary (40%) are more likely to have received gifts/loans. Those in Vancouver (34%) and Toronto (32%) are more likely to have lived with low/no rent.

2019 GiftsLow/

no rentBoth Either Neither

Price paid for your homeMean

Median $406$350

$429$394

$406$350

$453$387

$413$374

$399$340

Total down payment for your home

MeanMedian

$80$50

$92$50

$91$50

$112$71

$88$50

$77$40

Size of the mortgageMean

Median $326$323

$337$302

$314$275

$342$283

$325$295

$322$280


MeanMedian

17.9%14.0%

18.9%16.0%

20.4%19.0%

22.9%20.0%

18.8%16.0%

16.9%12.0%

Those getting gifts made larger down payments, buying more expensive homes

Those benefiting from low/no rent made larger down payments but did not buy more expensive homes


Half who received a gift/loan say that without it they would have delayed buying a home until they had saved a larger down payment by themselves

18

If received gift/loan from family or line of credit: If you had not been able to obtain gifts or loans from family members or other financing beyond your own savings and RRSPs, which of the following would you have done?

32%

51%

15%

I would buy my home but wouldhave made a smaller down

payment

I would delay buying a home untilI had saved up a larger down

payment myself

I would not delay, but would seeka lower priced home (smaller, or

located further away) with a downpayment I could afford

Key Differences:

Those in Quebec outside of Montreal are ore likely to say they would have bought their home with a smaller down payment (43%)

Among those who received gift/loan from family or line of credit, n = 800


Respondents are almost evenly split in their opinion of putting less than 20 percent down payment if longer amortization had been available

19

If down payment 20% or more: Although you put down 20 percent or more for your current home, how likely would you have been to put down less than 20 percent if longer, 30-year amortizations had been available to allow you to afford a more expensive home or to reduce your monthly payment?

19%

31%

18%

26%

6%

Very likely

Somewhat likely

Somewhat unlikely

Very unlikely

Don’t know/not sure

Key Differences:

Those who are more likely to have considered putting down less than 20 percent if a longer amortization had been available include those in Toronto (57%) and Montreal (64%).

Those in Ontario outside of Toronto (54%) and Quebec outside of Montreal (55%) are less likely to have said they would have done so.

Net: Likely

49%

Net: Unlikely

45%


Six in ten say it would have been likely for them to use a 30-year amortization with a down payment of less than 20 percent

20

If paid $750,000 or more: Currently, those whose home costs more than $1 million are ineligible for mortgage insurance and must make down payments of at least 20 percent. If the rules had permitted it at the time when you were shopping for homes, how likely would you have been to prefer to use a 30-year amortization with a down payment of less than 20 percent to allow yourself to purchase a home valued at $1 million or more?

17%

42%

17%

13%

12%

Very likely

Somewhat likely

Somewhat unlikely

Very unlikely

Don’t know/not sure

Net: Likely

59%

Net: Unlikely

30%

Key Differences:

Due to small sample size, there are no notable subgroup differences.


Findings: Mortgages

21


All mortgage info sources become more important

22

77%

75%

69%

69%

59%

59%

59%

57%

43%

40%

39%

37%

74%

70%

66%

65%

53%

56%

52%

54%

39%

34%

36%

33%

73%

71%

66%

64%

61%

55%

52%

48%

35%

30%

35%

31%

Mortgage broker/specialist

Family/friends

Bank/credit union representative

Real estate agent

Internet (personal financewebsites/media)

Internet (lending institution)

Financial planner/advisor (not affiliatedwith the lending institution)

Mobile Tools (for example Apps, onlinecalculators, etc.)

Builder/developer

Social media (personal finance blogs)

Traditional media (newspapers,magazines)

Attending a local home show

2019

2017

2015

How important were each of the following sources of information to you in helping you learn about your mortgage options?

Key Differences:

Those in Vancouver, Toronto, and Montreal are each more likely to have relied on bank/credit union reps, real estate agents, personal finance websites, lending institution websites and financial advisors.

Those in Calgary, Alberta outside of Calgary and Manitoba/Saskatchewan are more likely to have relied upon family/friends.


Two-thirds say they consulted a mortgage specialist at a bank or credit union

23

Which of the following did you work with to obtain your mortgage for your home?

68%

29%

66%

31%

66%

31%

Mortgage specialist at a bankor credit union

An independent mortgagebroker 2019

2017

2015

Key Differences:

Those in Vancouver (76%) and Quebec outside of Montreal (72%) are more likely to say they used a mortgage specialist at a bank or credit union, as are those aged 35+ (73%), those with children (71%).

Those more likely to use an independent mortgage broker include those in Alberta (35%).


Reasons for using a Mortgage Specialist or Broker

24

45%

19%

35%

16%

14%

18%

23%

10%

23%

18%

10%

39%

12%

9%

9%

29%

11%

27%

27%

14%Bank/CU

Broker

Key Differences:

Those working with a mortgage specialist at a bank or credit union are more likely to cite convenient location (16% vs. 9%) and incentives offered (13% vs. 9%).

Those working with a mortgage broker are more likely to cite:

The interest rate offered (43% vs. 35%)

The expertise/knowledgeability of the lender (30% vs. 19%)

Recommendations by family/friends (43% vs. 23%)

Recommendations by the real estate agent (28% vs. 14%).

It is my main financial institution

I have other financial products with that institution (e.g., credit cards, car loans,

investments, etc.)

The interest rate offered

Product features (e.g., lump sum payments, skip payments, etc.)

Incentives offered (e.g., cash, loyalty reward points)

Convenient location

Expertise/knowledgeability of the mortgage lender

A mortgage specialist offered to come to my home

Recommended by family/friends

Recommended by my real estate agent

Ability to provide info in my home country’s language (i.e., other than French or English)

Why did you choose to work with the mortgage brokerage firm or bank or credit union that you chose?


All mortgage features becoming more important

25

Key Differences:

Those in Toronto are more likely to say important mortgage features include longer or shorter amortization periods (80%), access to home equity (74%), cashback (66%), energy saving mortgages (62%), mortgages for self-employed workers (55%), and mortgages for non-primary residences (59%).

Those from Ontario outside of Toronto are more likely to say payment flexibility/prepayments (89%).

Those in Vancouver are more likely to say access to home equity is important (75%).

Among new Canadians, those in B.C. outside of Vancouver are more likely to cite new to the country provisions (100%).

88%

85%

81%

72%

67%

66%

55%

53%

46%

46%

86%

81%

77%

61%

63%

49%

47%

39%

40%

87%

84%

81%

57%

60%

47%

43%

35%

34%

2019

2017

2015

Available fixed or variable interest rates

Payment flexibility or prepayments allowed

Available open or closed mortgages

Longer or shorter amortization periods

New to the country provisions (base n=220)

Access to Home Equity

Cashback

Energy saving mortgages

Mortgages for self-employed workers

Mortgages for non-primary residences

How important were each of the following mortgage product features to you when deciding on your mortgage options?


Increased proportion of those who used a different lender

26

Key Differences:

Those in Quebec outside of Montreal (53%) are more likely to use their primary financial institution.

45%

54%

45%

51%

48%

49%

Same lender as mainFinancial Institution

Different lender as mainFinancial Institution

2019

2017

2015

TotalMort. Spec. at bank/ CU

Indep. Mort. Broker

Same as Main FI 46% 55% 21%Different FI 53% 44% 77%Don't know 1% 1% 3%

Please indicate which of the following is your main financial institution, where you have a chequing/savings account and debit card, and which is the financial institution you obtained your mortgage from?


More than half plan to renew with their current provider when their term ends

27

When your current mortgage term ends, will you be most likely to…?

55%

20%

7%

18%

57%

19%

7%

17%

53%

21%

6%

20%

Renew with your currentmortgage provider

Seek a different mortgageprovider

You will not need to renew asyour mortgage will be

completely paid off

Don’t know

2019

2017

2015

Key Differences:

• Those in Montreal (35%) and Quebec outside of Montreal (27%) are more likely to say they will seek a different provider.

• Those working with a mortgage specialist at a bank are more likely to say they will renew with their current provider (61%), while those working with an independent mortgage broker are more likely to say they will seek a different provider (28%).


Findings: Financial Confidence

28


31%

27%

24%

32%

28%26%

201920172015201920172015

Planned Already done

Double-up, or increase the amount of your bi-weekly/ monthly mortgage payments

Make a larger, once a year lump-sum payment

Equal proportion of those who have doubled-up or increased their mortgage payments and those who have made a larger, once a year lump-sum payment

29

Key Differences:

Those in Toronto are more likely to say they have made lump-sum payments (40%), and those in Ontario outside of Toronto are more likely to say they have made double up payments (35%).

In the past year, have you done either of the following to pay off your mortgage faster?

36%34%33%

42%

37%

40%

201920172015201920172015


Over half say they have been able to pay their bills and save money over the past year

30

Thinking of your financial situation over the past year, which of the following most accurately reflects your situation…?

53%

33%

8%

3%

53%

32%

9%

3%

50%

34%

9%

4%

Able to pay all your bills &save some money

Managed to pay all of yourbills/savings did not grow

Had to draw on yoursavings to pay all of your

bills

Had to borrow money toget by 2019

2017

2015

Key Differences:

Those in Calgary are more likely to say they were able to pay all their bills and save some money (62%).

45%

38%

11%

5%

Gen Pop


Key Differences:

Those more likely to say their financial situation improved compared to this time last year include those in Ontario outside of Toronto (48%)

44%

47%

9%

42%

49%

9%

43%

47%

9%

Improved

Stayed the same

Gotten worse 2019

2017

2015

Slightly more say their financial situation has improved

31

Compared to this time last year, has your financial situation…

24%

58%

16%Gen Pop


Slightly more say they have a lot of confidence in their long-term financial health

32

For each of the following, please indicate if you strongly agree, somewhat agree, somewhat disagree or strongly disagree….

Key Differences:

Those more likely to say they have a long-term financial plan include those in Ontario outside of Toronto (82%)

Those in Toronto are less likely to say they have a lot of confidence in their long-term financial health (77%)

I have a lot of confidence in my long-term financial health

I have a long-term financial plan for retirement that I am

working towards

I am concerned about making ends meet month to month

83%

76%

43%

81%

76%

41%

79%

73%

39%2019

2017

2015

61%

58%

37%

Gen Pop


Stable self-reported Financial Fitness trend

33

Which of the following best describes your Financial Fitness?

22%

50%

21%

6%

1%

24%

47%

24%

4%

2%

23%

48%

23%

5%

2%

I am in great financial shape - Ihave set clear financial goals that I

am well on the way to achieving

I am in pretty good shape - I have ageneral notion of what I want toachieve with my finances, and

things are more or less going in theright direction

I am neither in great shape nor poorshape - I try to save when I can, but

I don't seem to be getting ahead

My financial fitness is not very good- I know that I haven't been able toachieve the financial goals that I

think I should have by now

My financial fitness is very poor - Ifeel like I am always falling behindand/or that I don't know where to

turn for help

2019

2017

2015

Key Differences:

Those who are more likely to say their Financial Fitness is great/good include those in Montreal (79%) and Calgary (78%).

Net: Good72%71%71%

13%

39%

30%

12%

5%

Gen Pop

52% Gen Pop


Those remaining are in great shape

34

First-time homebuyers are in much stronger Financial Fitness than the general population, and the gap is widening

18%

31%

35%

12%

4%

17%

20%

28%

22%

13%

Looking Great

Looking Good

Managing

Vulnerable

Alert

First-Time Buyers

General Population

49% FTB37% Gen Pop.

16% FTB35% Gen. Pop.


Conclusions

35


Conclusions

36

Affordability challenges and stress tests are keeping growing numbers from first-time homeownership – only those in top financial shape remain.

1

Growing numbers rely on parental support and have had to compromise with smaller, more affordable choices than they would have preferred.

2

Many would have preferred the choice of longer amortizations; and the ability to buy a home priced over $1 million with less than 20% down and a longer amortization.

3

Have the rules gone too far?4


Environics Research Group

33 Bloor Street East, Suite 900

Toronto, ON M4W 3H1

37

Thank you

Documents

Genworth HEW FTHO Environics Presentation - David for May 9.pptx … · 2019-05-16 · Got a new job/raise/bonus Birth of a child Spoke to a professional who showed that I could afford