The dream of homeownership is strong among millennials
Nicole and Matt have two small children. Matt is a welder and Nicole works in a salon. Two years ago, while Nicole was pregnant with their second child, they decided it was time to start looking for a home.
They searched REALTOR.ca for their perfect starter home.They needed a few bedrooms, some space for the kids to play in the yard and, ideally, a garage for Matts welding side jobs. They called a REALTOR, spoke with a mortgage broker and made a decision.
Home ownership was not affordable for them at that time. They moved into Nicoles parents house. Not how you expected that story to end, is it?
Unfortunately, this is the reality that many millennials (born between 1981 and 1996) face in Canada today. In research released in October of 2018, conducted by Abacus Data on behalf of the Canadian Real Estate Association (CREA), housing ranked as the top priority for Canadian millennials.
In fact, 86 per cent of Canadian millennials who are not homeowners want to own a home someday and 68 per cent of those are passionate about it.
So whats stopping them? In the survey, millennials stated that saving enough for a down payment, the cost of carrying a home with monthly mortgage payments and mortgage interest rates were the top three factors that impacted their ability to enter the housing market. Saving a down payment was listed by 47 per cent of millennials as the top issue that affects their ability to buy a home.
Researchers also asked millennials what impact recent housing policy changes had on their decisions to enter the housing market. The results were shocking, with more than 60 per cent feeling that interest rate increases and government decisions that make it more difficult for people to get a mortgage have had a negative impact on housing affordability.
There is a clear desire from Canadian millennials to achieve the dream of homeownership. Most millennials want to own a home and will be looking to our elected leaders for progressive policies to make those homes affordable.
Recently, proposals from the Nova Scotia Association of REALTORS (NSAR), in conjunction with the Canadian Real Estate Association (CREA), have been implemented by the federal government to improve affordability. In March of 2019, the Home Buyers Plan (HBP) was increased to allow first-time buyers to borrow up to $35,000 from their RRSP towards a down payment.
But more can be done to provide meaningful assistance and allow more Canadians to enter the housing market. In the 2019 election, millennial voters will make up the largest portion of the electorate at 37 per cent. With such a large portion of voters identifying as millennials, housing affordability is expected to become a prominent election issue.
That idea sits well with Nicole and Matt, who are still living in her parents basement apartment looking forward to purchasing their first home sometime very soon.
- Contributed by NSAR
NSAR is the professional association for more than 1,500 REALTORS in Nova Scotia.
CANADA HOUSING MARKET: THE FALL’S RISE
Canadian home sales rose by 8.6% (sa m/m) in October, the largest increase since July 2020. Listings moved in the same direction, albeit by a much smaller 3.2% (sa m/m). The larger increase in sales carried the sales-to-new listings ratio, an indicator of how tight the market is, to 79.5%, up from 75.5% in September, and much higher than its long-term average of 54.5%. As a result, the composite MLS Home Price Index (HPI) rose by 2.7% (sa m/m)the third consecutive acceleration, and the biggest, after months of price gains deceleration. Single-family homes and apartments were the main drivers of Octobers price gain.
Movements in the market were broad-based, with the uptick in sales spread out across much of the country. Sales went up in 28 of 31 local markets we track. Kitchener-Waterloo recorded the largest increase (29.5% sa m/m) followed by Thunder Bay, Kingston, Okanagan-Mainline, and Winnipegall recording increases of over 15% (sa m/m). While these are mainly suburban secondary markets, primary markets are also showing signs of strength, with Torontos sales going up by 9.9% (sa m/m) and Montreals and Vancouvers by 7.8% (sa m/m). Octobers national level of sales is historically strongthe second highest on record for October after October 2020, and a remarkable 40% (sa) higher than the 20002019 October-average.
Excess Household Savings and Implications for Inflation in Canada
Canadians have built up a record amount of savings during the pandemic. By some estimates, it totals around $300 billion. This stockpiled spending firepower has fueled concerns that inflation could be higher and more persistent than currently thought, especially at a time of growing supply-side constraints.
However, there are a few reasons to suggest the inflation impulse from excess savings may not be as hefty as some believe. The amount of funds in highly liquid cash form is significantly lower than the headline estimate, consumers are likely to gradually draw on their savings to spend, and the reorientation of outlays from goods to services will dampen price pressures.
Still, the amount accumulated in savings is large and unprecedented. This represents an important upside risk to the Bank of Canadas consumption and inflation forecast in the October Monetary Policy Report.