Nearly half of Canada’s millennials think owning a home is ‘a pipe dream’: poll
Toba Ghoosi is a student at the University of Guelph studying biomedical toxicology, works part time as a pharmacy assistant and lives at home with her family. Unlike many millennials, she is also saving up for a down payment on a home.
“I see myself buying a home in the next five years for investment purposes. For me, the benefits of ownership outweigh long-term renting,” she said. “I plan to buy a home as soon as I qualify for a mortgage. I don’t expect my family to help me with that since everyone already owns a home or they’re considering investing their own money, too.”
Although home ownership is difficult for millennials due to rising home prices, personal debt and stagnant incomes, Ghoosi believes otherwise. “Anything is possible when you have the right knowledge. You need to be financially literate to have money work for you ... Every person comes with a different financial background. The government should implement interest rates based on our earnings to encourage millennials to become homeowners.”
Yet almost half (46 per cent) of Canadian millennials think that becoming homeowners in the near future is “a pipe dream,” according to a poll by accountant KPMG.
Indeed, millennials “may be facing different challenges in building wealth than previous generations of young Canadians,” Statistics Canada said in a report last April.
A recent Statcan Twitter poll asked Canadians how old they were when they bought their first home and 52.1 per cent said they were 25 to 34 years old, prompting backlash from millennials.
“Does anyone younger than 30 own a home that their parents haven’t bought for them?” asked Twitter user @curtislarsh.
Although 72 per cent of millennials in KPMG’S survey said their goals include owning a home, almost half (46 per cent) of the ones who have bought a house relied on financial help from their parents to boost their down payment.
“The combination of rising house prices, high levels of personal debt and annual incomes that are just a fraction of the cost of buying a home compared with their parents’ generation, is pushing the dream of home ownership out of reach for many millennials,” Martin Joyce, national leader for human and social services at KPMG, said in a release. “This is particularly challenging in the markets of Vancouver and Toronto.”
Statcan in January reported that residential property prices rose 0.4 per cent in Toronto and 0.2 per cent in Vancouver during the fourth quarter of 2019. Prices declined by 0.2 per cent in Calgary “mostly because of an oversupply in the housing market over the previous year and high unemployment rates.”
KPMG pointed out that the debt-to-income ratio for young millennials is as high as 216 per cent, while it was 125 per cent for Generation Xers at the same age (between 23 and 38) and 80 per cent for baby boomers.
Moreover, millennials are taking an average of 13 years to save for a 20-per-cent down payment, instead of the five years it took their parents in 1976, according to report by Generation Squeeze, an advocacy group for younger Canadians.
“If they do manage to save up and buy a house now and delay retirement savings, our poll finds 65 per cent of millennials fear they won’t have enough saved for retirement,” Joyce said.
KPMG’S survey indicated that most people want the federal government to make housing more affordable, make it easier to use money in Registered Retirement Savings Plans for down payments, raise Tax-free Savings Account limits, and implement a new registered savings system for home ownership, similar to the Registered Education Savings Plan for education savings.