Millennials are embracing homeownership, says study

Millennials don’t plan to rent or live in their parents’ basement forever. Many believe that buying a home is a wise financial investment and are embracing the idea of homeownership.

These were the findings of the 2015 Genworth Canada First-Time Homeownership Study, conducted by Environics Research.

“Buying your first home is the biggest financial decision most people will ever make,” said David MacDonald, group vice-president of financial services with Environics Research Group. While buying a home often involves a lot of trepidation, the survey found that first-time buyers who have gone through the process are feeling confident about their decision.

Environics interviewed 1,800 first-time homebuyers across Canada between February 5 and March 4, and the majority of those (77 per cent) were millennials, age 35 years or less. One-fifth of those surveyed were born outside of Canada, with 62 per cent having immigrated in the past 10 years.

So what motivated them to buy their first home? “Right off the top, 53 per cent believe owning a home is a wise financial decision,” said MacDonald. But they also disliked renting or wanted to buy a home now before prices increase further.

The average price paid for a home was $293,000 — though this varies by city (the highest average was in Toronto at $425,000 and the lowest was in the Atlantic provinces at $185,000).

Nearly two-thirds of respondents made a down payment of less than 20 per cent (the average was $34,000), putting them in a situation where mortgage default insurance was required.

“The average down payment lines up at around eight or nine per cent,” said Stuart Levings, president and CEO of Genworth Canada, adding that the percentages are highest in Toronto and Vancouver.

In Toronto, there’s a high level of “gifting,” where parents gift a lump sum to their child for a down payment. “We believe that parents are using equity from their homes, which creates the room to assist the child,” said Levings.

And while 62 per cent of first-time homebuyers are purchasing a home with a spouse or common-law partner, a substantial number — 35 per cent — are buying a home on their own. Those in Atlantic Canada, Manitoba and Saskatchewan are more likely to live in detached homes, while those in Montreal, Toronto, Calgary and Vancouver are more likely to purchase a condo.

Price is the No. 1 consideration in the search for a new home, said MacDonald. But first-time homebuyers are also looking to buy in a safe neighbourhood that’s close to work. Size and style are important, as is the potential to renovate, resell or rent out part of the home.

Regardless of the numbers, MacDonald says each homebuyer is unique and complex — something that mortgage specialists and realtors should take into account. “We’re a country of communities with very unique and localized challenges,” he said, “so depending on where you’re based, the kinds of guidance you give them will have to be tailored to the market context.”

For more information on Canada’s First-Time Homebuyer Survey, click here.

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