Are You Likely to Buy a House? That Depends on Who You Talk To
A poll done by Decima Research for the Canadian Imperial Bank of Commerce and released in 2004 says that newcomers are more likely to buy a home in the next year than people born in Canada. The Decima study says that immigrants who arrived in Canada before 1980 took an average of 15 years to buy their first home in Canada, while those who arrived since that time buy a home in an average of 6 years. Experts said that this was due to more affordable home prices and to the increasing number of internationally trained professionals coming to Canada. These people have the financial means and background to buy a home more quickly.
But that study seems to disagree with a recent Statistics Canada report (The Decline of Immigrant Homeownership Advantage) which tells us that immigrant families are less likely to buy a home than their Canadian counterparts. It says this is due in part to declining incomes among immigrant families (because they can’t find proper employment).
The Statistics Canada report suggests that a drop off in immigrant family income is responsible for the decline in immigrant home ownership. The Statistics Canada study was put together using information from 1981-2001 census data, so it does not include information from the past five years. But the study does say that by 2001, 64 per cent of Canadian-born Toronto residents owned their own home compared to 61 per cent of immigrant families.
On the other hand, the Decima/CIBC study said that approximately 22 per cent of immigrants plan to buy a home in the next year, compared with only 14 per cent of those born in Canada.
Should you – as someone who simply wants to buy a home – care about studies and reports like these?
Though studies and reports should not change your personal plans, they should interest you for a number of reasons.
The Canadian economy is market driven. It follows the laws of supply and demand. If there is great demand for a product (like homes or cars) within a certain sector (like immigrants or males aged 18 to 24) then companies make a greater effort to market those products to you and make sure you are well served. More information is made available to you. There is more competition for your business, which drives prices down and gives you better terms on payments or loans.
If the market-place thinks you are not likely to purchase a product, they will spend very little time, money or effort trying to figure out how to serve you better. Instead, they will shift their attention to consumer groups they consider more likely to use the product or service.
The Statistics Canada report is important in another way, because it increases awareness of the problem newcomers have in finding suitable employment. If no one knows about it, then they do nothing to improve the situation. Governments and corporations must be encouraged to do all they can to help new immigrants get better jobs.
How does this affect you as a consumer?
Whether you are buying a product like a house or opening a bank account, it is up to you to find out the information you need in order to make the deal you want.
If you’re buying a house, you should get a copy of Canada Mortgage and Housing Corporation’s (CMHC) free booklet called The Newcomer’s Guide to Canadian Housing. Written in clear English, the publication explains everything you need to understand about buying or renting a home. It is available in PDF (Adobe Acrobat) format on their website www.cmhc.ca. Or you can phone CMHC at 1-800-668-2642 and order your free copy.
Whether or not newcomers in general are buying new homes, one thing is certain: if you personally want to buy a home, then it’s up to you to demand the best service.
There are thousands of realtors to choose from. Finding a broker who speaks your language may make you more comfortable, but it is more important that they are good at what they do. Talk to several different agents at different companies. They should be able to help you with important first steps like finding out whether or not you will qualify for a mortgage, who will the lender be and what interest rate will you pay?
If you don’t qualify for a mortgage from a major bank, credit union or financial institution, you should probably find out what you need in order to qualify at those companies rather than going to smaller, less established mortgage brokers. You will probably need to be established in a steady job at a certain income level and you will probably need to establish a credit rating before you qualify for a traditional mortgage.
Be patient and work toward those goals. Stay in contact with a realtor, keep an eye on house prices, get to know your new city and decide what neighbourhood you’d like to live in and study your Newcomer’s Guide to Canadian Housing.
If you do all these things, you’ll be well-prepared when the time comes to buy that house – so it won’t matter at all whether Statistics Canada or Decima Research says that newcomers are buying houses, because you’ll already be moving in.