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Canadian millennials who hope to one day own a home say they face a tough decision: stay in the city they love or leave if they want to pursue that dream.
A new Royal LePage survey conducted by Leger found nearly two-thirds of Canadian millennials who don’t already own a home are confident they will one day, but 52% say they should move for the next TO DO.
Despite this bleak outlook, millennials could end up with a higher homeownership rate than baby boomers, according to Phil Soper, CEO of Royal LePage.
Soper said millennial ownership was trending upwards, and based on that as well as the relative confidence the survey showed about future ownership, he thinks millennials could end up owning homes at a higher rate than their predecessors, the baby boomers.
“This generation could end up having the highest homeownership rate in Canadian history,” he said.
When it comes to moving, Torontonians are attached to their city, Soper said — four in five millennials here say they’ll stay if the cost of living permits. However, 63% say they think they will have to move to become owners, compared to 55% in Montreal.
Forty-six percent of millennials don’t believe their salary will increase enough to buy a home in their current location.
“It’s a tough decision,” Soper said.
The survey of 2,003 Canadian millennials aged 26 to 41 was completed in June. He revealed that a quarter of non-homeowner millennials don’t believe they will ever own a home.
According to the survey, 57% of Canadian millennials already own a home, with a higher proportion owning a home among those 35 and older.
Fifty-one percent of Canadian millennials plan to buy a home in the next five years, and for nearly half of them, it will be their first home.
About 73% of baby boomers currently own their homes, which is the highest rate of any generation, Soper said (the overall rate in Canada is over 68%).
If millennials’ intentions hold true, they could surpass that, he said.
Not surprisingly, the percentage of millennials planning to become homeowners in their future is higher in cities like Montreal and Calgary than in Toronto and Vancouver, Soper said.
“This generation of Torontonians overwhelmingly desires homeownership, and many of them are willing to make concessions to climb the real estate ladder,” said Tom Storey, a Toronto-based sales representative at Royal LePage, in Wednesday’s press release.
“Ideally, they could work entirely remotely and have the flexibility to buy whenever needed to find a property in their price range. For those who need to be close to their place of work in town, settling for a small condo is a common alternative.
Young potential buyers continue to face significant entry challenges as the rising cost of borrowing has become a barrier even as the market has cooled, according to the release. But that shouldn’t deter potential buyers from buying outright, Storey said in the statement.
“With rising interest rates, even if your monthly payments are similar today to what they would have been in February or March on a more expensive property, your down payment is now significantly lower,” he said. he declares.
“In the long term, is it more advantageous to buy at a lower displayed price than at lower interest rates, which will be renewed every three to five years?”
Sales and prices have been falling for months as the Bank of Canada proceeds with a series of oversized rate hikes in an attempt to curb soaring inflation.
In Toronto, home resales were down by around 47% in July compared to the previous year, and house prices rose only 0.1% in July compared to June.
Some experts even predict a massive price drop in the housing market up to 20%.
The cooling housing market will likely help some millennials buy earlier, Soper said. When markets correct, as they did after the financial crisis, buyers and sellers tend to adopt a waiting pattern, he said, but the first to start buying again are the first owners.
That’s because they don’t have a horse — or a house — in play, he said, and can only benefit from falling property prices.
Soper said the beginning of this trend is starting to show.
“We’ll see more of that in the fall, and by the spring of 2023, I feel like we’ll have a real surge in first-time home buyers,” he said.
With files from Joshua Chong and Jacob Lorinc
