Despite ongoing housing affordability issues across Canada, younger generations remain optimistic about homeownership as a valuable long-term investment. A recent survey by Royal LePage reveals that 84 per cent of Canadians aged 18 to 38 (the “next generation” of homebuyers) feel this way.
Of those who don’t currently own a home, 74 per cent consider homeownership a significant goal they hope to achieve in their lifetime. However, young buyers are well aware of the financial hurdles: 54 per cent believe that owning a home is attainable, 26 per cent are uncertain and 20 per cent doubt it’s achievable for them.
Optimism among challenges
“It is not surprising that young buyer hopefuls see immense benefits in home ownership,” notes Phil Soper, president and CEO of Royal LePage.
“What is both surprising and promising in these findings is the practical and purposeful manner in which these people are tackling affordability barriers. They are well educated on the state of the real estate market and the wide variety of government programs put in place to assist young families find homes. They are hyper-focused on saving for a down payment, which is often the biggest hurdle buyers face. And, they are open to creative solutions, such as shared ownership with friends and family, or buying a property with the express intention of renting a portion of the home to a tenant.”
For many, this drive to own property comes from a desire for long-term housing security. About 73 per cent of next-generation homebuyers prioritize homeownership for a permanent place to live, while 57 per cent believe it provides stability. Additionally, 45 per cent feel renting is restrictive due to tenant-landlord policies, and 32 per cent view homeownership as a critical part of their retirement planning.
Confident in their financial future
Even though many young Canadians face numerous barriers on the path to homeownership, 75 per cent still plan to purchase a home in their lifetime.
“The youngest cohort of homebuyers in Canada has no shortage of barriers on their path to ownership. Though the cost of borrowing has begun to come down, chronic supply shortages have kept housing prices from dropping, even as demand softened under the weight of high interest rates,” says Soper. “Despite these hurdles, the next generation of homebuyers remains committed to their pursuit of owning real estate, and are remarkably optimistic that they can make their dream a reality.”
Among those who are unsure or don’t believe homeownership is possible, 58 per cent cite insufficient household income to cover the costs, and 52 per cent say they lack enough savings for a down payment. Conversely, those confident in achieving homeownership attribute their optimism to diligent saving (45 per cent), career trajectories that promise high income (31 per cent) and sufficient combined household income with a partner (26 per cent).
Sacrificing for the dream of homeownership
40 per cent of those planning to buy a home expect to do so within the next five to 10 years, while 25 per cent anticipate purchasing a home in more than 10 years. Nearly 18 per cent plan to buy a home within the next three years and 13 per cent in three to five years — motivated by the possibility of lower borrowing costs.
To save for a down payment, 47 per cent are setting aside a portion of their earnings regularly, 42 per cent are focusing on maintaining a good credit rating and 34 per cent are cutting back on discretionary spending. 30 per cent live with family to save on rent and increase their savings for a home purchase.
To improve affordability, 45 per cent would consider buying a property with rental income potential and 31 per cent would consider a rent-to-own program. Despite the trend of parental assistance, nearly half (47 per cent) of respondents plan to purchase a home without financial support from family, while 32 per cent expect some form of financial help.
Delaying life milestones to save for a home
High real estate prices are prompting young Canadians to make significant sacrifices. For example, 27 per cent have postponed or canceled travel plans and 21 per cent have delayed purchasing a car to save for a home. Additionally, some are delaying moving out of their parents’ homes (21 per cent), living independently (17 per cent), starting a family (14 per cent) or saving for retirement (11 per cent).
“If policymakers needed yet another example of the impact of our nation’s chronic housing supply crisis on the financial security and well-being of young people, this is it,” Soper stresses.
Policy changes to support first-time buyers
To increase affordability, the Canadian government now allows financial institutions to offer 30-year amortizations for insured mortgages on new construction homes for first-time buyers, up from the previous maximum of 25 years. This policy aims to reduce monthly payments and make homeownership…
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