Though millennials may be the most educated and making a decent amount of money, homeownership still seems like a “pipedream” to many of them, according to the results of a new poll commissioned by KPMG.
The Millennials and Retirement poll found that 72% of millennials have a goal to own a home, but 46% say homeownership is a pipedream. The poll surveyed 2,500 Canadians, 1,000 of which were millennials (aged 23 to 38). According to KPMG, millennials are now the largest generation by population in the country.
Nearly half of millennial homeowners received a financial boost from their parents in order to buy a home. A shocking 38% believe their homes won’t be worth as much in the future. This suggests many millennials believe a market softening (or even a crash) is in store for Canada’s housing market. We’d be interested to know where this 38% own property, because we can’t see anyone in the Greater Toronto Area thinking that their first home won’t be worth at least slightly more in the future.
Millennials are the most educated, and it’s led to some high paying jobs, especially in the tech sector, but their high incomes have not helped with homeownership. The debt-to-income ratio for millennials is a whopping 216%, compared to 125% for Generation X and just 80% for Baby Boomers. Most of the debt among millennials is mortgage debt.
"The combination of rising house prices, high levels of personal debt and annual incomes that are just a fraction of the cost of buying a home compared with their parents' generation, is pushing the dream of home ownership out of reach for many millennials," says Martin Joyce, Partner, National Leader, Human & Social Services, KPMG, in a release. "This is particularly challenging in the markets of Vancouver and Toronto."
According to the Canada Mortgage and Housing Corporation, millennials take an average of 13 years to save for a 20% down payment, while it took their parents just five years back in the 1970s.
"That's eight fewer years that millennials might have for saving more for their retirement," Joyce adds. "If they do manage to save up and buy a house now and delay retirement savings, our poll finds 65 percent of millennials fear they won't have enough saved for retirement."
Respondents said they want the government to make it easier to use RRSP savings for a down payment, and to increase the TFSA limit. The more options there are for millennials to save and access money, the easier it will become to save for a down payment.