More and more home owners finding themselves overextended

by Ephraim Vecina12 Apr 2019

Financially overextended households represent a growing portion of the nation’s residential owners, accounting for 39% of Canadians, according to the annual RBC Home Ownership Poll.

The demographic, also referred to as “house poor” owners in RBC’s analysis, is defined as a household spending around 30% to 40% or more of its total income on home ownership expenses like mortgage payments, property taxes, maintenance, and utilities.

Fully 92% of respondents admitted that this condition is ripe for fiscal anxiety, but almost half (47%) argued that “it’s worth the sacrifice.” On the other hand, 51% said that they would not place themselves in such a situation if they can help it.

Approximately 56% stated that it will be better to wait until next year to get into the market, with 47% saying that it is the prolonged economic uncertainty that’s making them hesitate. Among those delaying their purchases, 54% are expecting prices to go down.

RBC cited a recent major shift in buyer demographics as a possible contributor to these trends. As of 2019, the ratio of those buying homes with their partner/spouse has steadily declined (42%, compared to 49% in 2017), while purchasing a residence by oneself has become more popular (32%, versus 29% in 2017).

“We’re seeing a fundamental contrast in who’s at the buying table,” according to Nicole Wells, vice-president of home equity financing at RBC. “There is a surge in confident, in-control solo home buyers and, on the polar opposite end, those who are saying they can’t do it alone and need the assistance of family.”

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