Young adults in the Generation Y category are not so different from their parents in one important way – this generation, born after 1982, share the same goal of buying their own home.
In a survey released by Royal LePage Real Estate, four-in-five (80.9 per cent) of Generation Ys surveyed indicated they have plans to move to another primary residence at some point in the future, with the majority of those living in the prairie provinces (62.6 per cent) stating they planned to buy rather than rent.
Engaged couple Bryan Backman- Beharry and Amanda McNair bought a home in 2012, putting them among those Gen Ys who are already homeowners. Spurred on by their impending nuptials, Backman-Beharry said the couple’s decision to buy came as a result of multiple factors.
“The first of these was our decision to stay in Calgary for the next five-plus years, until that point we were unsure where work would take us, or whether we were ready to be in a different city (than) our families. Once we knew we had jobs we wanted to stick with and still placed a high value on the close proximity of our immediate family, the decision was much easier.”
According to the 2012 census, there are roughly 245,000 Calgarians aged 25-34 living in Calgary. Mitigating factors aside, the idea that those Calgarians still have the same desire as previous generations to settle down and establish roots in a community is one reinforced by Royal LePage CEO Phil Soper.
“Baby boomers have built homes for themselves. They are established in their neighbourhoods and their residences have become a place of happiness for family and friends,” said Soper. “It’s their children that are seeking to create a similar atmosphere of their own, even though new impediments exist for this younger generation.”
For Gen Y buyers, those new impediments revealed in the survey included changing mortgage rules, down payments and affordability, with 72.4 per cent of Generation Y surveyed admitting some level of pessimism regarding their ability to purchase a home. Just under half of respondents (45.8 per cent) said new mortgage rules would affect their ability to purchase a home. Almost two-thirds (63.8 per cent) of Generation Y respondents plan to put less than 20 per cent as a down payment on a new property. The majority of funds for down payments from Generation Y homebuyers (an average of 67 per cent) will come from a combination of savings, RRSP contributions and gifts from family.
A similar survey conducted in 2012 by Better Homes and Gardens, showed members of Generations X and Y displayed novel approaches to help deal with the hurdles of homeownership, including living at home longer and taking on a second job.
For Backman-Beharry and McNair, the novel approach to purchasing their first home included adding a legal secondary suite to their property to bring in extra income.
“Since my fiancée and I wanted to live relatively inner-city, our biggest obstacle was finding a home that we loved and could afford. In the end we could not find such a home within our original budget, and we had to take on more debt than planned,” said Backman-Beharry. “We offset the extra debt to some extent by developing a legal basement suite to help supplement our mortgage payments.”
RBC recently released a report showing 89 per cent of Albertans surveyed said buying a house or condo is a good investment, higher than the national average (84 per cent), even as home buying intentions have dropped from a year ago (22 per cent compared with 31 per cent). Almost half of Albertans (49 per cent) feel their current housing market is balanced, compared to the national average of 40 per cent.
“It’s no surprise that some Albertans are re-thinking their decision to buy a home, given the regulatory changes regarding mortgage rules and economic challenges in the past year,” said Don Peard, vice president, Mortgage Specialists, RBC. “The good news is that the majority of Albertan homeowners are confident in their real estate investments and their ability to manage mortgage debt.”