Home Ownership Top Of Mind for Millennials
- 68% of non-homeowners aged 25 to 35 intend to purchase a home within five years
- 72% of cohort feels confident in their short-term financial outlook
- 40% of cohort saw their savings grow since mid-March
According to a recent Royal LePage demographic survey, nearly half (48%) of Canadians aged 25 to 35 currently own their home, and 25 per cent of these homeowners purchased a property during the pandemic. Among non-homeowners, there is a strong intention to purchase in the future (84%), with 68 per cent planning to make the move in the next five years. Sixteen per cent say they plan to purchase a property within the year, while 14 per cent say they will buy within one to two years, and 39 per cent are looking to purchase in two to five years.
"The pandemic provided an unexpected prize for young Canadians -- a path to home ownership," said Phil Soper, president and CEO, Royal LePage. "Mortgage rates fell to historically low levels and the competition for entry-level housing lessened. Many investors sought to divest of property as traditional renter groups such as foreign students, new immigrants and short-term renters disappeared behind closed borders."
Soper noted that much higher than typical demand from this cohort, combined with older homeowners who have been generally more reluctant to put their property on the market during the pandemic, has contributed to a near-crisis shortage of listings in parts of the country.
"Measures necessary to prevent the spread of COVID-19 have motivated many of our younger Canadians to buy, while the health crisis dissuaded many of our older homeowners from selling," continued Soper. "Some young people living with parents or roommates found their work-from-home environment uncomfortably crowded. Others saw a once-in-a-decade affordability window open on their dream of home ownership. On the other hand, many older homeowners whose homes are adequate for changed employment circumstances have delayed their desire for a housing upgrade until the medical crisis is under control."
Confidence in Canadian real estate is strong and despite economic challenges related to the pandemic, Canadians aged 25 to 35 have a healthy personal financial outlook. Ninety-two per cent of those surveyed agree that owning a home is a good financial investment. Seventy-two per cent are confident in their short-term financial outlook and 78 per cent are confident in their long-term financial future. Many (40%) have even seen their savings grow since the onset of the pandemic, and 11 per cent saw a significant increase.
"In many ways, the pandemic has sucked the joy out of our normally kinetic young adults' lives. No dining out, no concerts with friends or winter escapes to the sunny south. Even retail therapy has lost its luster when no one will see those new shoes on the next Zoom call. The silver lining is in soaring savings; unspent money that is finding its way into real estate investments," said Soper.
Nearly two thirds of Canadians in this age group (63%), who are employed or seeking employment, say the ability to work for an employer that allows the option of remote work is important, a fact that is not surprising given the volume of sales in regions outside of the major urban centres since the onset of the pandemic. Fifty-two per cent said the availability of remote work has increased their likelihood to move further from their current or future place of work. Overall, 39 per cent of this age group are considering a move from their current home to a less dense area as a result of the pandemic, while 46 per cent said the pandemic had no impact on their desire to move to a less dense area.
When given the choice, 45 per cent of those aged 25 to 35 said they'd prefer to live in a city. Similarly, 47 per cent said they would choose small town or country living. The top responses for the most attractive feature of living in a city are walkability (21%) and access to events, attractions and other entertainment options (21%), followed by diversity of people and cultures (18%), and more employment opportunities (17%). The top reasons for wanting to move to a less dense area are access to more outdoor space (62%) and lower home prices (61%), followed by the affordability of larger properties (51%).
Experts across the country noted young buyers felt comfortable with the safety measures in place around the home buying process during the pandemic.
"Younger buyers are exceedingly comfortable with online research, be it for the latest personal tech, a pair of running shoes, or a home," said Soper. "This group has had no problem adapting to our enhanced use of virtual tours and electronic contracts. We expect the pandemic will have permanently accelerated the acceptance among our clients of using many of our emerging home buying and selling technologies."
In Ontario, 44 per cent of residents aged 25 to 35 own their home. Of those homeowners, 26 per cent purchased a home since mid-March of last year. Among those who do not currently own a home, 68 per cent say they intend to buy within the next five years.
Ontarians in this cohort largely believe that home ownership is a good investment (92%), and nearly half of those surveyed (41%) say their savings have increased since last March. Record low mortgage rates and the option to work from virtually anywhere continue to draw young buyers to markets across the province.
In the Greater Toronto Area, 46 per cent of respondents say the pandemic has increased their desire to move to a less densely populated area.
"The pandemic has put a lot of things into perspective, especially for first-time home buyers," said Tom Storey, real estate agent at Royal LePage Signature Realty in Toronto. "Most of my 25- to 35-year-old clients have fit into one of three distinct buying scenarios over the last year: the softer condo market and low interest rates allowed renters to become owners; move-up buyers who had purchased a condominium a few years ago were able to turn that equity into a down payment on a larger property in the suburbs; or they've left the city altogether for a significantly larger space in more affordable places like Hamilton, Guelph, or even cottage country."
Storey added that this cohort is not expecting to find their dream home straight out the gate. They are interested in taking advantage of some extra savings and low borrowing costs, to invest in a property that has appreciation potential.
Seventy-one per cent and 75 per cent of those surveyed in Ontario feel confident in their short-term and long-term personal financial outlook, respectively. Forty-three per cent say their desire to move to a less dense area has increased since the onset of the pandemic, and 56 per cent say the option of remote work has increased their likelihood of moving further away from their employer.
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