The overwhelming majority of millennial Canadians want to own their own home despite major concerns over the costs, according to surveys done by CIBC and BMO. In the survey, BMO found 76 per cent of Canadians ages 19 to 35 who rent plan to buy a home in the next 5 years, but many (nearly 30 percent) are afraid they will never be able to afford the down payment and monthly mortgage costs.
More than half of millennials have stated that they will have difficulty saving the amount of money they will need for a home that suits their needs. Many also said that they are simply waiting for high house prices to drop and will count on family members to chip in on a down payment. Most millennials also say they want a detached home, but banks argue this is not an affordable option for many young home buyers.
How difficult is it to buy a house today?
Millennials across Canada expect to pay an average of $350,000 on their first home and they expect to have to pay a down payment of roughly $53,000 to make it happen. In markets like Toronto and Vancouver, that number jumps astronomically. In a market like Winnipeg, even though we aren’t feeling the inflationary effects that Toronto and Vancouver are dealing with, it can still be difficult to make that first foray into home ownership for millennials. Here is a chart showing the price increases from April 2015 to April 2016:
The average house price in Canada as of April 2016 is $508,097, this is a 13 percent increase in the average house price over a one year period. You can see why there may be doubt in millennials minds about the feasibility of owning a home in the future when wages are only going up 2-3 percent year over year; this creates a large gap.
The cost of buying a home may be at a record high, but that doesn’t mean millennials have given up on the dream of owning their own home; 86 percent say home ownership is important, even though 63 percent live with parents or rent. It is a myth that millennials don’t want to own their own home. Home ownership is an important milestone to many, and that hasn’t changed even though it has become increasingly difficult to get into the market.
Here are some tips for younger Canadians to help them realize their homeownership dreams:
If you are a planning on buying a home check out our blog: Purchasing a Home? 6 Factors You Should Consider and talk to your MIG Insurance broker to make sure you have the right coverage and what factors may affect the premium difference from home to home.