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Generation gamble? Millennials more willing to engage in bidding wars to get their dream home: TD Survey Shows
TORONTO, May 18, 2021 /CNW/ - According to a recent real estate survey commissioned on behalf of TD, one-third of Canadians surveyed (32 per cent), are willing to take part in a bidding war in order to secure their dream home, as housing prices continue to soar in many markets across the country.
Interestingly, the TD survey also reveals that a homebuyer's willingness to offer above asking typically varies with age. More than half (51 per cent) of young adults under 35 are prepared to offer above list price, while fewer than one-third (31 per cent) of respondents between 35 and 54, and just 18 per cent of those 55 and older, are willing to do the same.
The TD 2021 Real Estate survey results arrive alongside proposed government changes to the qualifying rates for uninsured mortgage loans. If implemented, the guidelines would require borrowers to qualify at their mortgage contract rate plus two percentage points, or 5.25 per cent, whichever is higher. As housing prices across the country continue to rise, the change is designed to help buyers avoid over-extending themselves. It also underscores the need for advice along every stage of the homebuying process – but particularly when it comes to affordability.
Budgeting for a bidding war
"There's no question that the price of homeownership is much more than your down payment and monthly mortgage payments," says Jared Jarman, Associate Vice President, Specialized Advice at TD. "In today's competitive environment, buyers need to ensure they're keeping a close eye on their budget, building in some wiggle room so that they know they're able to cover expected and unforeseen costs. A financial advisor can help by working with you to develop a budget that lets you know how much you may be able to afford before you begin to house hunt," continues Jarman.
Despite a widespread willingness amongst younger survey respondents to enter a bidding war, most Canadians are still reluctant to bid over-asking when multiple offers are on the table. In this situation, 45 per cent of respondents said they would stand firm on their initial offer. But for those willing to do what it takes to win a bidding war, Jarman emphasized the importance of developing a budget range beforehand that allows for some flexibility. Even amongst Canadians open to going beyond the list price for their dream home, budgeting and setting limits is key, he adds.
The TD survey results also reveal how competitive respondents are willing to be. According to the survey, approximately two in ten (19 per cent) of competitive bidders said they would exceed the asking price by up to $50,000, while just 13 per cent would push their offer further, between $50,000 and $100,000 over-asking and beyond.
Affordability and the great unknown
According to TD, more than half of Canadians surveyed (52%) feel home ownership is less attainable now than it was pre-pandemic thanks to changing house prices. Unsurprisingly, the survey also reveals that changes in financial security over the last year have dampened home-buying opportunities for many Canadians, with one-third of respondents saying unexpected changes in their personal finances have made the prospect of homebuying less attainable now than before the pandemic.
"We know Canadians have had to deal with incredibly unprecedented circumstances this past year, including unemployment and other financial challenges for many," said Jarman, noting that TD has safeguard options in place to protect borrowers from unanticipated challenges. "TD Mortgage Protection is just one-way customers can help protect themselves from unforeseen life events including critical illness and even death."
Fifty-seven per cent of TD survey respondents said they consider finding a home within their budget to be the biggest challenge to buying a home within the next year. The ability to afford a suitable home appears to be a greater concern amongst residents in Ontario (63 per cent) and B.C. (62 per cent) compared to Quebec (48 per cent) and the Prairies (43 per cent).
While it's hard to know what comes next, Canadians can trust that TD has a variety of solutions to help customers achieve home ownership and protect the homes they've worked so hard to purchase.
Fast facts from the TD 2021 Real Estate During COVID survey:
- Among other challenges noted in the survey results were the uncertainty that comes with the COVID-19 pandemic (15%) and the lack of housing supply (10%).
- Canadians value their space during the pandemic, and are most likely to see features like backyard space (43 per cent) and square footage (40 per cent) as important considerations when buying a home.
- While the need for space may be unsurprising, Canadians' desire to be within close proximity to everyday amenities (grocery stores, banks, etc.) hasn't changed – just over half (51 per cent) compared to 50 per cent prior to the pandemic.
- Four in 10 (40 per cent) Canadians surveyed who currently own a house or condo say rising prices in their area would make them more interested in listing.
When it comes to finding the best mortgage solution, TD offers a wide array of online services, including the TD Mortgage Affordability Calculator, which can help determine what Canadians may be able to afford. Most mortgage applications can also be completed online with TD, including pre-approval application and full mortgage application. To learn more about TD Protection Plans, visit https://www.td.com/ca/en/personal-banking/products/insurance/credit-protection/. To get specialized advice to help with your home ownership journey, visit td.com/ca/en/personal-banking/products/mortgages/.
About the TD 2021 Real Estate During COVID
TD Bank Group commissioned Ipsos to conduct a national online survey of 1,001 Canadians aged 18+. This poll was conducted between March 31 and April 6, 2021.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the fifth largest bank in North America by assets and serves over 26 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 14 million active online and mobile customers. TD had CDN$1.7 trillion in assets on January 31, 2021. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
SOURCE TD Bank Group
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