De­sire to buy closes gen gap

Winnipeg Free Press - Section G - - HOMES - By Marty Hope

ICAN still clearly re­mem­ber, as a high­schooler, the day my dad came home from work and dropped a large brown en­ve­lope on the kitchen ta­ble.

There was no big cel­e­bra­tion, just sat­is­fied smiles.

My mother opened the en­ve­lope, looked in­side and put it in her cedar chest.

The let­ter marked the day when the home they had pur­chased in 1943 for some­thing like $7,000 was theirs. The mort­gage had fi­nally been paid off.

Ev­ery month, a chunk of my dad’s hard­earned steel fac­tory money went to pay­ing down that mort­gage — no dou­bling up, no five per cent down pay­ment, no help from par­ents, and just one in­come.

Some months, it was tough sled­ding, but it got done.

TD Canada Trust re­cently came out with a Gen­er­a­tional Home­own­er­ship Study in which they talked with to­day’s young home­buy­ers (ages 18 to 34) and with some 55-plus folks who still re­call buy­ing their first home.

The ques­tions put to the 900 who were in­ter­viewed by An­gus Reid Strate­gies were pretty ba­sic: What prompted you to buy? Did you get some kind of fi­nan­cial help? How im­por­tant was pay­ing off the mort­gage?

When to­day’s 55-plus Cana­di­ans bought their first home, pay­ing off the mort­gage was a top pri­or­ity — much more im­por­tant than it is to this cur­rent gen­er­a­tion.

To­day, less than half of young adults (49 per cent) agree that pay­ing off their mort­gage is a first pri­or­ity, com­pared to 64 per cent of those over 55, ac­cord­ing to the study.

Debt was some­thing to get rid of, as it is for most peo­ple to­day. But I can re­call a real­tor telling me that to­day’s home­buy­ers are not afraid of debt.

Mind you, that was be­fore the eco­nomic down­turn. Some may have changed their minds by now.

What hasn’t changed is the de­sire to own a home.

A cou­ple of months ago, I in­ter­viewed Devon Wolfe, a full-time Uni­ver­sity of Cal­gary stu­dent, who, along with girl­friend Priscilla Naber, de­cided the time was right to buy their first home.

The pair of 20-year-olds had crunched some num­bers and de­cided rent­ing was just a waste of money.

They wanted to start get­ting some re­turn for the cash they were dol­ing out ev­ery month.

When we con­sid­ered how much we have paid in rent in the past rel­a­tive to the cost of own­ing a home — as well as the fact the pay­ments are be­ing trans­ferred into eq­uity rather than go­ing down the drain — it was pretty much a no-brainer, says Wolfe.

Young peo­ple are now more likely to feel they are fi­nan­cially ready to buy a home than their par­ents and grand­par­ents were: 51 per cent to 37 per cent.

Here comes the kicker — two of them, ac­tu­ally: About 36 per cent of to­day’s 18-34 age bracket said they could not have af­forded their first home without help from fam­ily, com­pared to 16 per cent in the 55-plus cat­e­gory.

Go­ing a step fur­ther, 27 per cent of young buy­ers ei­ther re­ceived a gift of money or bor­rowed from fam­ily or friends. For Wolfe and Naber, though, this wasn’t the case. They saved their down­pay­ment. Kind of a throw­back. Just 10 per cent of the 55-plus set said they bor­rowed from fam­ily or friends.

When it came to get­ting a mort­gage, the older buy­ers tended to go visit a bank man­ager who prob­a­bly at­tended the same church they did, bowled in the same league and shopped at the same gro­cery store.

For nearly two-thirds of the 55-plus group, there was no shop­ping around. Loy­alty was the de­cid­ing fac­tor when it came to get­ting a mort­gage.

To­day? Com­put­ers make shop­ping around a given. Rates are ne­go­tiable — go to the lender with the best deal, get pre-ap­proved and start the buy­ing process.

There are so many dif­fer­ent op­tions avail­able now — and eas­ier ac­cess to in­for­ma­tion with the In­ter­net — that it’s no won­der to­day’s first-time home­buyer shops around a bit more, says Chris Wisniewski, group prod­uct man­ager for TD Canada Trust. Thirty years ago when peo­ple were looking for fi­nanc­ing, they usu­ally had lim­ited choices.

— Canwest News Ser­vice

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