When it comes to jumping into the housing market, Ontarians are now the most pessimistic people in the country.

Just a third of potential first time home buyers in this province believe it’s a good time to buy, according to a new survey taken for BMO by Pollara Strategic Insights.

At the other end of the spectrum, Albertans are the most optimistic, with 53 per cent of first time home buyers in that province saying it’s a good time to dip into the market.

Those numbers are no surprise to Queen’s University real estate professor John Andrew, who says we can thank the impact of tighter mortgage rules and buyers who appear to be holding their breath.

“The greater pessimism of people in Ontario is likely attributable to the B20 mortgage rules having a greater impact on homebuyers there than in most other regions, significantly reducing the amount that the average homebuyer can borrow,” said Andrew.

B20 requires borrowers who pay a down payment of more than 20 per cent to demonstrate that they can afford a mortgage (or home equity line of credit) at a rate two percentage points above the rate being offered or at the Bank of Canada’s five-year benchmark rate, whichever is higher.

At the same time the B20 rules are making it harder for people across the country to qualify for a mortgage, housing prices have fallen much less in Ontario than elsewhere, Andrew pointed out.

“Home prices have declined less in Ontario than in other provinces such as B.C. So many people in Ontario are waiting for the other shoe to drop,” said Andrew.

Albertans have greater reason for home-buying optimism, because real estate and oil prices have taken a tumble, Andrew argued.

“In Alberta the sentiment held by many is that home prices (and oil prices) have bottomed out and that now is a good time to buy,” Andrew suggested.

In Quebec, 38 per cent of first-time buyers believe it’s a good time to buy. In Manitoba and Saskatchewan, which were grouped together, 42 per cent say it’s a good time. In B.C., it’s also 42 per cent and in Atlantic Canada it’s 43 per cent.

The survey also found that almost two thirds of first time home buyers will find it a challenge to come up with a five per cent down payment — 26 per cent say it will be a “major” challenge, while 39 per cent say it will be a “minor” challenge.

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