A majority of young Canadians feel real estate is a good long-term investment but they’re concerned about their ability to become a homeowner, finds a Mortgage Professionals Canada report.
The report segments the next generation of homebuyers (adults under the age of 40) into three categories: imminent buyers (those looking to purchase in the next year), mid-term buyers (those wanting to buy in one to five years), and distant buyers (those looking to purchase beyond the next five years).
The next generation believes real estate is a good long-term investment and 72% consider a mortgage as good debt. But many of them are waiting to buy because they want to pay down their student loan debt, continue saving for a down payment, or wait for a promotion or to get married.
“We found that there is a strong interest in homeownership among next generation homebuyers but they are waiting until they feel financially secure,” says Paul Taylor, president and CEO of Mortgage Professionals Canada.
Ninety-four percent of the next generation plan to purchase a home in the future. Of those who plan to own, 12% are imminent buyers, 58% are mid-term buyers, and 30% are distant buyers.
The majority of first-time homebuyers want their first home to be a low-rise dwelling over a condo. Fifty-nine percent want a detached home, 18% prefer a condo, 13% want a townhome, 8% prefer a semi-detached home, and 2% said other. However, there are some regional differences. Those living in Western Canada and Ontario are much more likely to prefer a condo (21% and 19%, respectively) compared to those living in Atlantic Canada (10%).
Affordability is a key consideration for a number of first-time buyers. Almost two-thirds of them have begun saving for a home. Ninety percent of imminent buyers have started to set money aside, with an average savings of $37,000. And 72% of mid-term buyers have begun saving, with an average of $27,000 in the bank.
In terms of a savings goal, 75% of first-time buyers plan to have a down payment of 10% or more, while 25% will put down less than 10%. However, those with a shorter timeline expect to have a smaller down payment. Nearly half of imminent buyers (46% vs. 25% overall) expect to put down less than 10%.
- 5 First-Time Mortgage Experiences
- It Can Take Decades to Save for a Down Payment on a House
- The State of Canada’s Residential Mortgage Market
Flickr: Joe Mabel