Prairie residents struggle to buy homes amid inflation

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This article was published 25/04/2024 (892 days ago), so information in it may no longer be current.

Residents in the Prairie region are struggling with challenges impacting their ability to achieve homeownership amid rising inflation concerns and financial pressures, according to a new poll by RBC.

The poll said more than half of respondents (58 per cent) voiced concerns that inflation is undermining their ability to save for a home, adding a significant majority (62 per cent) indicate they would require a side hustle or second job to afford a home.

With current economic uncertainties, the poll indicates nearly three in five (58 per cent) believe financial assistance from family is essential for a home purchase, with 20 per cent intending to or already engaging in co-ownership with family members. As well, 32 per cent express a desire to support family financially for housing or rent but lack the means to do so.

RBC regional vice-president Jessica Gerrits said the significance of understanding the underlying factors driving inflation concerns and their impact on homeownership aspirations cannot be over-emphasized.

“Many are feeling a squeeze on their wallets with 50 per cent of respondents in the Prairies saying they would need to overhaul their spending and saving habits to buy a home,” Gerrits told the Sun in an email on Wednesday. “While our poll didn’t delve into the specific causes of inflation in the Prairies, recent data from Statistics Canada indicates that Manitoba exhibits the lowest inflation growth compared to the rest of the country.”

Regarding the trend of individuals in the Prairie region considering side hustles or second jobs to afford a home, Gerrits explained that the poll results show that as Canadians start to do the math that goes along with homeownership, they’re realizing that they may need to explore different ways to cover those costs, which have been driven higher, in part, by inflation and a high-interest rate environment.

Centum Mortgage Choice partner Sheila Cooper agrees inflation impacts homeownership, including in the Brandon market.

“Inflation is certainly not helping or doing anyone any favours right now. With rising interest rates, qualifying is much more difficult,” Cooper told the Sun. “With the rising cost in everyday living expenses, it hinders individuals and families from the ability to save up for a down payment.”

Avoiding expensive car payments, targeting more affordable homes with a lower payment and amortizing loans as long as possible to reduce the payment would boost the purchasing power of potential homebuyers, she said.

Addressing the need for additional income streams that complement existing full-time employment, Cooper cautioned against burning out and emphasized that lenders typically require a minimum of two years of consistent income from secondary employment to consider it for mortgage qualification.

She advised residents to explore alternative options such as borrowed down payment programs and down payment assistance programs.

“We do have some lenders offering a borrowed down payment program — however, it requires low debt, good income and minimum credit score to qualify,” she said. “There are some down payment assistance programs available such as the City of Brandon Grant but there are some stipulations to qualify. I suggest meeting with a mortgage professional to see what your options are based on your current situation.”

On the national data, the poll indicates similar sentiments across Canada, with half of Canadians expressing concerns that inflation is impacting their ability to save for a home, mirroring the data for the Prairie region.

Despite the setback, 41 per cent of overall potential homebuyers say it will take them four years or less to save enough for a down payment.

RBC home equity finance senior vice-president Janet Boyle said Canadians have a lot of headwinds to face as they look to purchase a home today, whether they are a first-time buyer or searching for their next home.

“While affordability anxiety remains, our research found that many home buyers are exploring different approaches to realize their dream of home ownership,” Boyle said.

The poll also indicates among newcomers who arrived in Canada in the past five years, 73 per cent say they have always dreamed of owning a home, while 65 per cent say they are likely to purchase one in the next two years.

“Whether it’s your first or next home, with so many decisions to make it’s easy to feel overwhelmed when thinking about buying a home,” Boyle said. “Having a financial expert on your side who has a full picture of your finances can also help you build a home-buying plan that aligns with your finances, goals and lifestyle.”

The online poll was conducted using Leger’s online panel from Jan. 25 to Feb. 23, with a total of 2,824 Canadians aged 18 to 64 taking part. It is deemed accurate within a margin of plus or minus 1.8 per cent, 19 times out of 20, the financial institution said.

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