It is no secret that the younger generation is having a tough time entering the real estate market in Canada these days. With the average home in Canada now sporting an average price tag of $508,097 (as of April this year anyway), the average home price might be closer to a million by the time they’ve grown up enough to purchase a home of their own. How prepared they are going to be by that time largely falls on you.
Real estate prices in Canada surged up 13.1% this year, a trend that is likely to continue as Canada remains to be one of the most desirable places to migrate to and purchase a property at in the international real estate scene.
The struggle to buy their first home is evident in a survey by YPNextHome where 45% of Canadian millennials stated that they do not believe that they would be capable of purchasing their own home in the next 5 years. In fact, only a quarter of the survey respondents believes that they might be able to do so, while another quarter shared that they only see it happening if they can get a lot of help.
Not very encouraging, eh?
A survey by CIBG showed that although more than half of their Canadian millennial respondents are planning to purchase a home in the next 5 years, only just half of them have started saving towards that goal.
The younger generation is facing numerous financial challenges when it comes to future home ownership, aside from worrying about factors that can impact their ability to buy such as rising real estate prices and job security, they also have to content with coming up with the required sum for a home down payment.
We Need to Teach Financial Literacy
With all the challenges young future Canadian homeowners are facing, the importance of arming them with financial know-how as early as now can’t be discounted. If you need more convincing, just know that major investor groups, Canadian banks, and organizations such as the Financial Consumer Agency of Canada are taking matters into their own hands and have started programs for our youth’s financial literacy.
CIBC mortgages and lending vice-president Barry Gollom shared that the millennials’ plan and desire to own their own homes in the next few years is plagued by many hindrances and competing financial priorities, but that can be addressed by empowering them with knowledge so that they can map out a realistic time frame to make their goal of homeownership a reality.
Yes, it won’t be easy, but this way, it is certainly attainable.
Time to Act is Now
Another CIBC survey shares that 77% of Canadians believe that the younger generation is indeed having a tougher time as compared to previous generations and the majority believe that help should be extended to millennials so they can break into the housing market.
With Canadian home prices going up year after year (although the figures are largely affected by the boom in Vancouver and Toronto, so some markets are friendlier to those with limited finances), millennials would need $200,000 more to purchase the same half a million dollars property now because the average by then would have climbed up to $709,811.
Looking for another reason to teach your kids about real estate today? Think about this, the average home price back in 1992 is less than a third of what the same property costs today.
Yes, time is ticking, and home prices will continue to go up. How prepared are your kids for that?