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Wednesday , 23 April 2014
Dream of homeownership is alive in Gen Y

Dream of homeownership is alive in Gen Y

Young people in Canada still dream of owning their own home. The youngest of Generation Y, the children of the baby boomers, are just nineteen years old today—Gen Y were born 1994–1980. Buying a home probably isn’t a top priority for nineteen-year-olds, or even those in their early twenties. A lot of them rent, or live in university residences, or at home with the parents. But Royal LePage did a survey of them anyway, and found that both Generation Y and the Baby Boomers “strongly desire a house of their own.” (In the case of the Baby Boomers, it could be that they just want their kids to move out.)

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The dream of homeownership is alive, but Generation Y would-be buyers face the common problem of saving enough down payment. Many express worry about the government’s restrictions on mortgage lending.

The majority of Generation Y respondents (80.9 per cent) say that they intend to move “at some point in the future.” The more significant finding, though. at least from the point of view of the real estate and home building industries, is that a lot of them (39 per cent) plan to move in the next two years. And most of them do not see renting as a desirable long-term solution to their housing needs. Asked whether they preferred renting to owning, a decisive 85.7 per cent said no.

In fact, more than half (55.1 per cent) of the Generation Y group who plan to move in the next two years intend to purchase a home. About a third (32.6 per cent) plan to rent, no doubt reflecting financial realities and other lifestyle factors. There are regional differences on this, with British Columbians being the most open to renting.

Whether they intend to move or not, younger Canadians’ confidence in the value of real estate remains high, Royal LePage says. Fewer than one in ten of the Generation Y respondents did not believe that buying real estate would be a good investment.

But they face obstacles to getting their foot on the ladder. Nearly half (45.8 per cent) express the view that the government’s actions to restrict mortgage availability will affect their ability to buy a home.

And they are pessimistic about home affordability. About three-quarters (72.4 per cent) of Generation Y respondents agreed with the statement: “I desire to own a property in my lifetime, but I am pessimistic about my ability to own a home because of the current house price affordability.”

Related to the affordability issue for Generation Y home buyers is the problem of the down payment. Since they are mostly first-time buyers, they can’t rely on the equity in a home they already own. Instead, they will rely on savings, RRSP money, and gifts/contributions from family.

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The survey also included a sampling of 1,011 Baby Boomers (1947–1966). This group, generally well established and already owning homes, was not as concerned about the government’s actions to limit mortgages. Only 6.9 per cent of them thought that the new mortgage rules would make it harder for them to purchase a home. However, more than two-thirds of Baby Boomers (67.8 per cent) said that they were pessimistic about being able to afford a home in today’s markets.

About Nicole Ryan Editor

Avatar of Nicole Ryan Editor
I am Nicole Ryan, a contributing editor at Condo.ca—Canada's Condominium Magazine.

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