First-time homebuyers prepped for ownership
While millennials are often depicted as slackers living in their parents’ basement, playing video games and taking selfies, first-time homebuyers are, in fact, making responsible financial decisions when entering Canada’s housing market, according to a new study released by Genworth Canada.
“We wanted to focus on the first-time buyer because they really are the engine of growth in the economy,” said David MacDonald, group vice-president of financial services with Environics Research Group, which conducted the research on behalf of Genworth Canada. The findings were presented at a recent seminar in Toronto.
The study surveyed 1,800 first-time buyers across Canada — 77 per cent of whom are millennials.
“Just as boomers before them changed every facet of the marketplace, millennials are doing the same thing,” MacDonald said.
The typical first-time buyer is well educated and employed, and typically consults with a mortgage professional to purchase a home within financial reach, according to the Genworth study.
First-time buyers tend to have higher incomes than the general population (31 per cent have household incomes above $100,000). And they tend to work full time, have post-secondary education and are married or in a relationship.
About half of first-time buyers say they were motivated to buy a home because they believe it’s a wise financial decision. Three in 10 say they disliked renting or wanted to buy before prices increase further.
The typical first-time buyer is also conscious of the need to manage their debt burden. Fifty-seven per cent say they’ve avoided taking on additional debt since buying their home, while 36 per cent have doubled-up or increased their bi-weekly mortgage payments, or made a larger, one-time lump sum payment.
But it’s not all good news, said MacDonald.
Nine per cent of first-time buyers say they’ve had to delay or suspend mortgage payments since buying their home, and 11 per cent say they’ve had to delay or default on other bill payments.
Four in 10 are concerned about making ends meet month to month, with worries about the loss of a job, rising interest rates or unexpected household repairs.
The key takeaway, though, is that most millennials are confident about their financial fitness, said MacDonald. They’re taking steps to pay off their mortgage more quickly, and half of the survey respondents say that, not only are they able to pay their bills, but they’re also able to save money.
“First-time buyers who’ve gone through the process are feeling very confident,” he said, “and this bodes well for the real estate market in Canada.”