At the end of last year, we shared some highlights from Part 1 of a multi-part home ownership trends series - a joint effort from Sotheby’s International Realty Canada and Mustel Group. Today we’re excited to share some highlights from Part 2, which is all about financing the Canadian dream of homeownership.
The Modern Family Home Ownership Trends report focuses on young, urban homeowners, aged 20-45 years. More than half of the respondents are millennials and the rest are young Generation Xers. The survey covers Vancouver, Calgary, Toronto, and Montreal.
“The dream of home ownership remains compelling for today’s young families, but the reality is that many are facing serious obstacles to achieving this given rising costs of living, rising costs of housing, and other financial needs, such as saving for retirement,” says Brad Henderson, President and CEO, Sotheby’s International Realty Canada.
“While these are significant challenges without a simple or singular solution, our research reflects strategies from those who have navigated their way and successfully bought a home. There is no doubt, however, that in an environment of higher interest rates and tighter mortgage guidelines, today’s families will continue to confront new challenges as they make home buying decisions in this year’s market.”
According to the findings, 33% of respondents said that covering basic living expenses was the main barrier to ownership, making it the leading obstacle. The report also found that 20% of owners putting off saving for retirement in order to make a home purchase.
Other saving strategies included getting a higher paying job (19%), adding a part-time or freelance gig to full-time hours (14%), delaying having a child (12%), and moving in with family (9%).
When it came to making a down payment on a home, 71% used personal savings and 52% also relied on a financial gift or inheritance. Nearly a third borrowed from their RRSPs for the down payment. Apparently the majority think it’s all worth it though because 78% believe their home will outperform or match other financial investments in the next five years.
Toronto is a different story. With high rents and home prices, 35% of Torontonians delayed buying a home due to paying for basic living expenses. In order to save for a home purchase, 54% reduced or eliminated dining out and 47% reduced or eliminated travel.
Out of all the cities in the study, Toronto homeowners were most likely to take on part-time or freelance work in addition to their full-time jobs in order to save for their home purchase (16%). Torontonians were also most likely to delay having a child (15%) and more likely to move in with family (13%). Delaying saving for retirement was on par with the rest of the major markets at 20%.
Homeowners in Toronto may be more likely to take on extra work, move in with family, and delay having kids, but it’s because they have the highest rate of confidence in their real estate market. A whopping 83% believe their homes will outperform or match other financial investments in the next five years.
With would-be buyers finally adjusting to the stress test and interest rates looking like their taking a breather, 2019 may be a strong year for home sales in Toronto and other major markets in Canada.