They have seen the future and cannot afford it.
The vast majority of young people in Canada’s largest cities fear that they will not be able to buy a home in the community of their choice due to rising real estate prices and the cost of living, according to a new report.
Researchers from Sotheby’s International Realty surveyed 1,502 Canadians between the ages of 18 and 28, living in Vancouver, Calgary, Toronto and Montreal to quantify a growing feeling among members of Generation Z that young people have been excluded from neighborhoods where grew up.
In the coming years, the Canadian housing market will absorb the influx of demand from a younger generation of home buyers. But the survey results reveal that half of them “have already given up” the traditional dream of owning a single-family home, while 82 percent say they have doubts about being able to afford a home of any kind in their nearby locations. . .
In the greater Toronto area, the majority of respondents cited their current living expenses and student loans as the top barrier to saving for a down payment. Those hoping to buy property in Toronto said that, for the most part, they expect their first purchase to be a condo unit.
“The biggest financial barriers for Gen Z are current living expenses. Home prices have gone up a lot and the impact of inflation may translate into higher costs for building materials to build homes, “said Don Kottick, President and CEO of Sotheby’s International Realty Canada.
Respondents outside of Toronto and Vancouver had a more optimistic view of home ownership. In Calgary, where home prices average $ 540,900, young prospective buyers are more confident that they will be able to purchase a single-family home. Only 39 percent of those surveyed had given up on that dream, according to the report, compared with 56 percent in Vancouver, 52 percent in Toronto and 48 percent in Montreal.
Finn O’Driscoll, a 21-year-old who runs a ski shop in Calgary, bought a single-family home with his friend during the COVID-19 pandemic. He repurposed the money he had been saving for college and put it into a house.
“Looking at rental prices in Calgary, we realized that it was similar to what you would pay monthly for a mortgage. So we thought we’d go 50/50 in a house, ”O’Driscoll said.
In Toronto, the median monthly rent for a two-bedroom apartment rose 67 percent over two decades, from $ 979 in 2000 to $ 1,637 in 2020, according to the Mortgage and Housing Corporation of Canada.
Housing market activity during the pandemic has added to the problems of young home buyers. A CMHC study found that the total number of mortgage transactions increased in 2020 as buyers scrambled to get hooked on real estate while interest rates were low.
The dramatic rise in real estate debt, valued at roughly $ 2 trillion across the country, has fueled fears among economists that some Canadian homebuyers are in the lead and are exposed to a correction in the housing market.
In October, the International Monetary Fund raised the spectrum of markets, including the housing market, correcting or collapsing amid uncertain global economic conditions, including supply and labor market shortages, inflation and a slowing recovery. economical.
Royal LePage CEO Phil Soper has said he expects this winter’s housing market to be “unusually busy.”
Kottick maintains that there are optimistic conclusions from the survey.
“Based on their earnings at the moment, Gen Z is worried about the future,” he said. “But keep in mind that this is a young cohort that has yet to see their earning potential increase and have yet to receive generational wealth transfers. All of that could change as they get older, and for many of them, that could change their position in the market. “
Reference-www.thestar.com