Sellers can expect fewer first-time homebuyers as over nine million Canadians doubt they will ever become homeowners.
According to a new report by Finder, a website for comparison shopping, some 29 per cent of adults aged 18 and older have either given up on homeownership or resigned themselves to being “forever renters.”
Finder’s “Generation Rent” survey found that the number of people who are uninterested in owning a home has risen significantly over the past few years. In fact, almost two million more Canadians are now reporting no interest in owning a home than were before the COVID-19 pandemic. More than five million adults (16 per cent) said they were no longer interested in becoming homeowners this year in comparison to only one in 10 in 2019. That’s a 60-per-cent increase in just three years.
“Buying a home is a significant decision that requires a large emotional and financial commitment,” Romana King, senior finance editor with Finder, said in a press release. “For many, the erosion of housing affordability combined with rising mortgage costs, means the barriers to homeownership now appear almost insurmountable.”
The number of Canadians expecting to transition from renting to buying has also plunged in the past two years. Only 10 per cent of adults currently anticipate buying their first property in the next five years, compared with 17 per cent in 2020 — a 70-per-cent decrease.
Another four million Canadians (13 per cent) expect to rent for the rest of their lives. “Getting on the property ladder can feel out of reach for many potential first-time home buyers,” King said.
The survey results showed that attitudes toward homeownership vary among different age groups, with the youngest generation being the most hopeful. Almost half (45 per cent) of those aged 18 to 24 said they believed they will own a home within the next 10 years. In contrast, those between the ages of 35 and 44 were the least hopeful, with 18 per cent convinced that they will be renting forever.
“While there are significant obstacles to overcome — such as a large down payment and qualifying for loans at higher mortgage rates — it is still possible to fulfill the homeownership dream. The work to make this happen starts long before you open up the ‘for sale’ apps,” King said.
King added that Canada needs to assist first-time homebuyers because they are crucial to the country’s real-estate market. The country’s relatively high homeownership rate has little to do with first-time buyers, as Canada ranks among the bottom third of peer countries, according to data from the Organisation for Economic Co-operation and Development.
“It’s important to help first-time home buyers, as they are the engine of the housing market,” King said. “Whether it’s educating buyers on the sales process, helping to define loan terms, implementing rebates and tax-free saving incentives or getting buyers the best mortgage rates – every little bit helps.”
However, the report points out that homeownership is not the only way to grow your net worth. “Generation Rent” can accumulate wealth by being intentional about their savings, learning to invest, and using their geographical flexibility to their advantage.
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Today’s Posthaste was written by Noella Ovid, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
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