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First-Time Home Buyers Take Financially Fit, Well-Informed Approach

April 7, 2015

Genworth Canada Releases First-Time Homeownership Study

TORONTO, April 7, 2015 /CNW/ - First-time homebuyers are doing their homework and making responsible financial decisions entering Canada's housing market, according to a new study released by Genworth Canada.  The 2015 Genworth Canada – First-Time Homeownership Study shows that the typical first-time homebuyer is well-educated, employed, consulting with mortgage industry professionals and purchasing a home within financial reach.

"The survey shows that today's first-time homebuyers have their eyes wide open, their hands firmly on their pocketbook and are thinking hard before assuming the responsibility of homeownership," said Stuart Levings , President and CEO of Genworth Canada. "This prudence and careful planning should serve Canada's housing market well as responsible first-time buyers grow into responsible long-term owners."

Overall, first-time buyers tend to have higher incomes than the general population with 31% having household incomes above $100,000. Other typical traits of this primarily millennial population include working full-time (81%), holding a post-secondary education (89%) and married or in a common-law relationship (71%). One-fifth of all those surveyed were born outside of Canada with 62% of that group having immigrated in the past ten years.

According to the survey, the typical first-time buyer is also conscious of the need to manage their debt burden carefully. More than half (57%) have taken care to avoid taking on additional debt since buying their home. In addition, one-third (36%) have doubled-up or increased their bi-weekly mortgage payments, or made a larger, one-time lump sum payment.

"With good incomes, solid jobs and a financial partner with whom to share the responsibility of homeownership, most first-time homebuyers generate a positive profile from the perspective of a mortgage insurer," added Levings.

Clearly there are regional variations across Canada with respect to affordability that lead to some significant differences in price paid, type of home purchased and down payment levels. While the median price paid nationally is $293,000, this amount is highest in Toronto ($425,000) and Vancouver ($420,000) and lowest in the Atlantic region ($185,000).

These price variances explain the higher proportion of condo and town-home purchases in Toronto, Vancouver and Montreal, where such properties are the most affordable way to enter homeownership. Nationwide, 55% of first-time buyers settle on a fully detached home with 17% opting for a condominium, 15% buying a townhouse and 13% purchasing a duplex. By contrast, condominiums are the most popular option in Vancouver (47%), Montreal (40%) and Toronto (39%). In Atlantic Canada, on the other hand, fully detached homes account for 71% of all first-time home purchases.

The survey also notes higher median down payments in Toronto and Vancouver, which appear to be driven by higher savings and larger gifts or loans from a family member in those markets. While the median down payment nationally is 12%, this amount ranges from 8% in the Atlantic region to 21% in Toronto, as noted in the table below. Overall, 63% of buyers surveyed made a down payment of less than 20%.

First-Time Buyers: Key Regional Variances

Market

Median
Price Paid

Median
Down
Payment

Down
Payment
<20%

Household
Income
>$100k

Condo
Purchase

Vancouver

$420,000

20%

47%

32%

47%







Calgary

$370,000

10%

73%

39%

24%







Toronto

$425,00

21%

38%

40%

39%







Montreal

$250,000

13%

60%

24%

40%







Atlantic

$185,000

8%

77%

21%

5%







 

Source: The 2015 Genworth Canada – First-Time Homeownership Study

 

In terms of factors influencing choice of home, the group ranked price (94%), safe neighbourhood (91%) and size (90%) as their highest priorities. Other top motivators include the belief that owning is a wiser financial decision than renting, having saved enough for a down payment and wanting control of the property they live in.

"First-time homebuyers reflect the home buying population as a whole when it comes to their general motivations and considerations," said David MacDonald , Group Vice President, Environics Research Group. "They're looking for affordability, safe streets and a space they can enjoy. Even when opting for a condo, these factors rank higher than, for example, return on investment."

The 2015 Genworth Canada – First-Time Homeownership Study was conducted and analysed by Environics Research Group between February 5 and March 4, 2015. A total of 1,800 interviews were completed using an online methodology. For more information visit Genworth.ca.


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About Genworth Canada
Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For almost two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at December 31, 2014, Genworth Canada had $5.8 billion total assets and $3.3 billion shareholders' equity. Find out more at www.genworth.ca.

Special Note Regarding Forward-Looking Statements

This press release may contain forward-looking information within the meaning of applicable securities laws ("forward-looking statements").  When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company are intended to identify forward-looking statements.  Specific forward-looking statements in this document include, but are not limited to, statements with respect to possible changes in the housing market or any component thereof.

Any forward-looking statements contained herein are based on certain factors and assumptions, which appear proximate to the applicable forward-looking statements contained herein.  Inherent in forward-looking statements are known and unknown risks, uncertainties and other factors beyond the Company's ability to control or predict, that may cause the actual results, performance or achievements of the Company, or developments in the Company's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.  Actual results or developments may differ materially from those contemplated by the forward-looking statements.

The Company's actual results and performance could differ materially from those anticipated, as a result of both known and unknown risks, including the Company's expectations regarding its revenues, expenses, losses on claims and operations; the Company's anticipated cash needs and its estimates regarding its capital expenditures, capital requirements, reserves and its needs for additional financing; the Company's ability to accurately assess and manage risks associated with the policies that are written; the Company's ability to accurately manage market, interest and credit risks; anticipated trends and challenges in the Company's business and the markets in which it operates; changes in the global or Canadian economies.

This is not an exhaustive list of the factors that may affect any of the Company's forward-looking statements.  Some of these and other factors are discussed in more detail in the Company's AIF dated March 23, 2015.  Investors and others should carefully consider these and other factors and not place undue reliance on the forward-looking statements.  Further information regarding these and other risk factors is included in the Company's public filings with provincial and territorial securities regulatory authorities (including the Company's AIF) and can be found on the SEDAR website at www.sedar.com. The forward-looking statements contained in this press release represent the Company's views only as of the date hereof.  Forward-looking statements contained in this press release are based on management's current plans, estimates, projections, beliefs and opinions and the assumptions related to these plans, estimates, projections, beliefs and opinions may change, and therefore are presented for the purpose of assisting the Company's security holders in understanding management's current views regarding those future outcomes and may not be appropriate for other purposes.  While the Company anticipates that subsequent events and developments may cause the Company's views to change, the Company does not undertake to update any forward-looking statements, except to the extent required by applicable securities laws.

SOURCE Genworth Canada

or to arrange interviews, please contact: Lisa Azzuolo, Director, Communications, Genworth Canada, 905.287.5520 or Lisa.Azzuolo@genworth.com
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