October 23rd - 2014

Budgeting most important strategy for home buyers: Research

Ontarians planning to buy a home in the next two years cited various financial strategies to save for a down payment

Pulse infographic

Pulse infographic

Ontarians planning to buy a home in the next two years cited various financial strategies to save for a down payment, with the most common approach being to create a budget. Forty per cent of those surveyed said they would create a budget, whereas 36 per cent of respondents said they would cut costs and 36 per cent said they would earn more money.

These are findings from a new research initiative launched this past summer called the Ontario Home Ownership Index. The tool, created by the Ontario Real Estate Association (OREA) in partnership with global research firm Ipsos Reid, reveals the latest market outlook and home ownership trends across the province.

The index showcases details of the public’s perceptions and expectations of the real estate market, intentions to buy or sell, views on home ownership, housing trends and more. The research is being conducted twice a year throughout Ontario.

“The home buying process begins with a long hard look at one’s finances and knowing what you can afford – any real estate expert would agree with that,” says Costa Poulopoulos, OREA president. “The fact that creating a budget came out on top shows that financial preparedness is important to buyers; it’s one element that is mandatory when buying a home.”

Interestingly, only six per cent of respondents said they would rely on gifts or contributions from family to buy a home. Nearly a third of respondents (30 per cent) said they would sell or borrow against other real estate they owned, and almost a quarter (23 per cent) said they would invest in savings or RRSPs to save for their down-payment.

Saving strategies differed among types of buyers: Two-thirds (67 per cent) of first-time home buyers said they would create a budget, compared to only 29 per cent of repeat home buyers; half of first-time buyers (54 per cent) and only a third (29 per cent) of repeat buyers said they would cut costs or delay spending; the majority of Generation Y respondents (54 per cent) said they would create a budget whereas only 19 per cent of baby boomers said the same; only a quarter (26 per cent) of baby boomers and 44 per cent of Gen Y said they would cut costs.

“Strategies to save for a down payment depend on the buyers – their lifestyle, experience with real estate and often their stage in life, dictates which strategies will be most effective,” says Poulopoulos. “However, regardless of age or experience, home ownership is one of the biggest financial commitments most people will make in their lives; it takes proper planning to do it right.”

Recently, OREA asked its members for their impressions on the financial preparedness of first-time home buyers. Three out of four REALTORS® (75 per cent) found that these buyers tend to do their research and are prepared when they begin the home buying process. 

Various factors play into the home buying and selling decision. The index intends to explore these factors over time. Here are some findings from the research:

Ten per cent of Ontarians surveyed say they are “very likely” to purchase a home within the next two years; 14 per cent say they are “very likely” to sell a home within the next two years; a majority (57 per cent) believe the provincial real estate market is favourable while 20 per cent say it is unfavourable; 82 per cent agree that real estate is a good investment; 84 per cent think it makes more sense over the long term to own a home rather than rent. Those Ontarians surveyed ranked their top three reasons for buying a home as follows: long term investment value (29 per cent); affordability/availability of homes (26 per cent); and desire to own a home of their own (26 per cent).

To read more, visit the News Releases section of www.orea.com. Regional results of the Ontario Home Ownership Index can be seen in the Members section of the website and on the OREA blog at www.oreablog.com. You can also print colourful, visually appealing handouts featuring infographics that highlight key findings from the index to share with your clients. Look for “OREA launches the Ontario Home Ownership Index.”

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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