For some, buying a home can feel impossible in Canada’s housing market. We’ve seen plenty of conversations about the challenges aspiring homeowners face, especially the younger ones. A new study released by Re/Max confirms that; affordability, availability, down payments and stress tests are locking a new generation into becoming a nation of renters.
According to Re/Max president Christopher Alexander, homeownership rates in Canada have fallen by about three per cent over the past five years. However, that doesn’t mean that some 20-to-30-year-olds aren’t finding a way to make their homeownership dream a reality.
“70 to 75 per cent of Canadians want to buy a home in the next three to five years, and the fact that homeownership rates in most cities are falling is a concern. It shows you the barriers to entry are increasingly challenging,” says Christopher. “But places like Calgary and Edmonton are bucking the trends, mainly due to affordability and positive job growth.”
Related: Everything You Need to Know About Owning a Tiny Home in Canada.
Where Are Young People Looking to Buy?
Christopher adds that the average income in Edmonton and the strong job market have created opportunities for those looking to purchase a home. Smaller cities in Nova Scotia are also attractive to younger buyers. However, the Maritimes, Newfoundland and Labrador, and the Prairies are also more affordable options for young people entering the housing market.
“We don’t talk about the Prairies enough, but Saskatchewan’s provincial economy is doing quite well and average house prices in their largest cities are $250,000,” he adds. “The savvy homebuyer has been looking there because it offers so much and is really affordable.”
According to another report released by Fairstone last fall, certain cities in Quebec are also affordable for young Canadians. Trois-Rivières, Sherbrooke and Quebec City are among the most affordable places to live in Canada right now.
Getting Creative and Saving Up
Last year, Re/Max explored how young Canadians are getting creative in their journeys to owning a property. That report found that non-traditional homeownership is becoming more common, with more and more people looking at co-ownership, secondary suites and rent-to-own models as viable alternatives to traditional purchasing paths.
“There are a number of avenues young people can take, but it does start first and foremost with saving towards a down payment,” Christopher says. “Maximize your government assistance programs and get creative. Those would be the three pieces of advice I would give.”
Related: Buying a Home Solo: It’s Possible and Here’s How to Do It.
Don’t Over-Extend Yourself
Christopher says most young people he speaks with want their dream house immediately. However, a more practical way to enter the housing market is to begin with a starter property and work your way up. Having it all right away just isn’t feasible without external financial support, especially if you choose to stay in a major city or most places in Ontario or British Columbia.
“A lot of young people expect a detached home with a yard, three bedrooms and four bathrooms right out of the gate,” he explains. “That’s really unrealistic, unless you’re in one of those communities we talked about. Real estate has always been a long-term investment.”
He adds that, traditionally, people don’t usually move into their forever home until their fourth or fifth property. Buying a condo as a first home and using it to move up and into a larger property in the future makes sense.
“It’s more about time in the market than timing it,” he says.
Urban vs. Suburban
When it comes to lifestyle, Alexander says not much has changed in terms of where young people would like to live and the historical pattern of moving out is still the same.
“Kids go to university, they come home and they move in with their parents. Then, they get a job and move into a city that has some nightlife and entertainment,” he outlines. “Once they begin to settle down and start families, they end up moving back to the suburbs. That hasn’t really changed.”
At the end of the day, every person and every situation is unique. If something is right for you, be open minded to different purchasing scenarios and think of it as a long-term investment opportunity.
“You have to think of it as not over-extending yourself financially; ask yourself if you can see yourself in the home for at least five years,” Alexander says. “If those two things line up and the property is right for you, you’re going to do really well.”
