Blog by Barb Pasternak,

<<< back to article list

ECONOMIC INSTABILITY NUMBER ONE FEAR FOR CANADIAN HOME BUYERS: ROYAL LEPAGE


Blog by Barb Pasternak | January 8th, 2010


Buyers remain nervous about the economy but few believe house prices will drop again, according to Royal LePage Advisor Survey

TORONTO, December 15, 2009 – As the Canadian real estatemarket continues to rebound from a steep decline a year ago brought onby the recession, home buyers remain nervous about the stability of theeconomy, according to a survey of 1,225 Royal LePage agents and brokersacross Canada. However, few buyers think home prices will decline again.

When asked to comment on the most common fears they are hearing fromhome buyers over the past three months, 38 percent of Royal LePageagents and brokers cited economic stability and related factors such asjob security. 23 percent said home buyers fear they may not be able tosell their existing homes at the price they are hoping for, while 12percent said buyers are hesitant because they believe prices have notyet hit the bottom of the cycle. Twenty percent of agents and brokerssaid they are not hearing any concerns from buyers.

The Royal LePage Advisor Survey, conducted online in November 2009,also found that an increasing number of Canadians are purchasing homesas investment properties, and almost 50 percent of brokers and agentssay the number of buyers intending to renovate their properties afterpurchase is increasing.

“Given the volatility in the real estate markets over the past 18months, it is not surprising that the state of the economy continues toweigh on the minds of Canadians as they consider buying a home,” saidPhil Soper, president and chief executive, Royal LePage. “Canadian realestate markets are enjoying a strong recovery as 2009 draws to a closeand appear poised for healthy growth in 2010.  Our survey shows thatconsumer confidence is edging towards normal levels.  Canadians clearlybelieve that the worst of the recession is behind them and that thereal estate market is on the path to sustainable recovery.”
 
“The most obvious sign that market conditions are improving is found inthe significantly higher unit sales volumes. That said, we have seensome significant recent increases in home prices, which is unusual atthis time of year.  Paradoxically, the recession is contributing to theunexpected rise in year-end house prices. On one hand, Canada’s lowinterest policy has stimulated demand. On the other, many Canadians whomight otherwise feel comfortable putting their homes on the marketdon’t yet have the confidence in the state of the economy’s recovery tolist their homes, which is contributing to the current supplyshortage,” Soper added.

According to the Royal LePage House Price Survey for the thirdquarter of 2009, the economic recession halted the flow of the realestate cycle from the fourth quarter of 2008 through the first quarterof 2009, but the market is essentially now back on track. Although thesupply of homes for sale continues to be constrained in many marketsacross Canada, Royal LePage predicts that once housing supply returnsto normal levels, the economy will support modest pricing growth into2010.

 

Survey results

What is the most common fear or hesitation about home buying that you have heard from buyers in the past three months?

Nervous about the stability of the economy / job security / personal financial security: 461 responses (37.7 per cent)
May not be able to sell existing home at the price we’re hoping for: 287 responses (23.4 percent)
Not hearing any concerns from buyers: 250 responses (20.4 percent)
Haven’t seen the bottom of the market, and prices may decline again: 149 responses (12.2 percent)

As a proportion of the total home sales over the past threemonths, has the number of homes sold as investment properties increasedsubstantially, increased somewhat, remained stable, declined somewhator declined substantially, as compared to homes sold as primaryresidences?

Increased substantially: 34 responses (2.8 percent)
Increased somewhat: 312 responses (25.4 percent)
Remained stable: 426 responses (34.8 percent)
Declined somewhat: 198 responses (16.2 percent)
Declined substantially: 58 responses (4.7 percent)

In the past three months, has the number of home buyersintending to renovate their properties after purchase increasedsubstantially, increased somewhat, remained stable, declined somewhator declined substantially?

Increased substantially: 97 responses (7.9 percent)
Increased somewhat: 503 responses (41.1 percent)
Remained stable: 444 responses (36.2 percent)
Declined somewhat: 95 responses (7.8 percent)
Declined substantially: 17 responses (1.4 percent)

About Royal LePage
Royal LePage is Canada’s leading provider of franchise services toresidential real estate brokerages, with a network approaching 14,000real estate professionals in over 600 locations across Canada.  RoyalLePage is managed by Brookfield Real Estate Services, and is part of abrand family that includes Royal LePage, Johnston and Daniel, and LaCapitale Real Estate Network.  An affiliated company, Brookfield RealEstate Services Fund, is a TSX listed income trust, trading under thesymbol “BRE.UN.”

For more information visit www.royallepage.ca.