Canadian First-Time Home Buyers Plan To Flee The City, Moving To Small Towns: BMO

Canadian real estate markets are going to be very different after the pandemic. BMO‘s annual housing survey found first-time home buyers (FTHB) are moving to small towns. More young adults now find small-town living to be much more desirable than living in any of Canada’s big cities.

Canadian First-Time Buyers Fleeing To The Suburbs

Almost half of Canada’s first-time home buyers (FTHB) are planning to move to the suburbs. The survey found 47 percent of FTHB are looking to buy a home in the suburbs at the national level. Both B.C. and Ontario both came in at a slightly higher 53 percent of FTHB looking to buy in the ‘burbs. It’s an odd trend when younger and higher-income young adults are moving outside of the city. It’s something straight out of the 60s.

Why the flight to the suburbs? Affordability is the biggest reason cited by 44 percent of survey respondents. The size of housing was also a major concern, with 41 percent of people citing it as a reason. Nearly half of people didn’t cite a lifestyle preference. Instead, they cited an issue related to the BoC’s facilitation of higher home prices. Not great when cities see their middle class flee, but that’s a different article. 

Smaller Town Living Is Becoming Much More Attractive To Young Adults

Small town living is becoming increasingly more attractive for FTHB. The survey found 35 percent of FTHB are looking at moving to either a small city or town. Buyers in this demographic cited affordability and space as the main reason. The survey results showed 47 percent for both of those reasons, respectively. There’s presumably some overlap between those looking at the suburbs and small towns.

Canada’s Big Cities Less Desirable Than Small Towns

One surprising thing is big cities are now less attractive to FTHB than small towns. Only 30 percent of survey respondents said they would consider a major Canadian city. Of those considering, only 27 percent are considering Toronto. Much less affordable Vancouver is almost half that, with only 15 percent.

The much more affordable cities of Montreal and Calgary didn’t find much love either. Both only received 11 percent, respectively. Small towns are now more attractive to young adults looking to buy a home. This is going to lead to a big shift in how cities look in the not-so-distant future.

More Space Is The Biggest Reason, But Not Always

Households are opting for a lot more space in small towns, instead of the city’s human work pods. The survey found 61 percent of home buyers want a detached home. Almost a third, 32 percent, are considering townhomes. Semi-detached homes were only a little more desirable than condos. Those came in at 28 percent and 27 percent, respectively. Townhomes being more popular than semi-detached units shows this isn’t just about space though.

Canadian real estate is going to look very different after it emerges from the pandemic. Buying a home anywhere is pricey in Canada, meaning FTHB are relatively affluent compared to their peers. When younger and more affluent adults find small towns more attractive than city living, you carve out a big demographic gap. When young and higher-income households leave, cities are left with lower-income workers left there for necessity, and older homeowners that bought when things were affordable. Not exactly a demographic mix that’s likely to attract a lot of future growth on its own.

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  • Tom Wolfe 3 years ago

    The future is in AgroHoods. An outdoor lifestyle with farm to table goodness. I lovely home on an acre or three, overlooking a farm – not a golf course or disintegrating shore line.

    It’s super cool.

  • D 3 years ago

    On the off chance that the people scoping up real estate here aren’t just foreign and domestic hedgefunds as well as rich foreigners cashing in on hard assets but instead millennials and young gen x willing to lock themselves into 30 years of slavery, I can see only one reason why they’d do it. What I see is that if an hyperinflationary event occurs they can pay down there principal, but the caveat is that they must keep their job during that. Chances are the only people that will have a job during a hyperinflation are people working in trades or engineers working in utilities. Some other people that would keep their jobs – waste management, politicians, criminals.

  • Ad 3 years ago

    Surely this will reverse itself relatively quickly post pandemic when FOMO and small town boredom come into play?

    • World Class 3 years ago

      That’s what I fear too. It all looks well and good when everyone is working from home and schools are shutdown. But what happens when your toddlers now are school age? What happens when you are allowed to socialize again and want to go out to dinner? Not to say that their aren’t pros for rural living – but not sure everyone has fully thought everything through.

      • Ian Brown 3 years ago

        People greatly over estimate how interesting the city is, and the quality of services available.

        Toronto and Vancouver are retirement villages now.

    • Kris 3 years ago

      It will reverse itself to a degree once companies start calling their employees back to the office. Good luck on that 2hr plus commute each way.

      • Ahmed 3 years ago

        If you have an office job and your boss calls you back, you’re not very good at your job.

        These people will just end up working remote for US companies, and make much higher wages.

    • Mike from Canmore 3 years ago

      100%. You can’t trust these numbers. They are wild extrapolation based on current linear thinking. I expect some people that overbid their small town house and try to come back will find few takers in a year time and may be ‘stuck’ unless they have a few hundred grand to burn in losing their principal.

  • A 3 years ago

    Smaller cities and towns are the future. This shift has started well before the pandemic. We have made the move ourselves recently to a wonderful city of 68,000 from a large metropolis. When we went to transfer our license, health care etc over, the clerk behind the counter said they had never seen so many people moving here from the big city. Best move ever.

    • Ac 3 years ago

      Until the city opens up again and you’re bored as hell…

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