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This Is Not Your Parents' Housing Market: TD Poll

April 25, 2013
4 mins
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The times are a-changing when it comes to entering the housing market, say Generation Y and Millennial buyers, according to a poll released by TD Canada Trust.

From balancing high property prices to tighter lending conditions, the new era of home buyers weighed in on challenges they feel their parents – the Baby Boomers – didn’t have to deal with.

The major obstacles in the way of Gen Y and the Millenials are the ability to save for a down payment, as house prices continue to rise, and a lack of employment and insufficient salaries cause limited cash flow.

Down Payment Difficulty

Now before you give the whole “I had to walk three miles in the snow to get to school” speech – it’s worth noting that according to the recollection of Boomers polled by TD, tiptoeing into the real estate market today is a bit more difficult then it was 30 years ago.

While 57% of Gen Y non-homeowners say saving a large enough down payment is a serious challenge, only 22% of Boomer homeowners echoed their sentiments.

Then there are property prices, which 52% of Gen Y non-homeowners say are too high for first-time buyers versus 16% of Boomer homeowners.

Mortgage Affordability Is Just Out Of Reach

Forty-eight percent of Gen Y non-homeowners say they aren’t earning enough to afford monthly mortgage payments, a challenge only 13% of Boomer homeowners remember having when they first entered the market three decades ago.

But that’s no reason to give up on homeownership, says Farhaneh Haque, director of Mortgage Advice for TD.

“The path to homeownership can seem daunting at first, but with financial discipline and smart planning, it’s possible for young Canadians to realize their dreams of buying a home,” says Haque. “Before you take the leap into homeownership, crunch the numbers with an expert so you know exactly how much you can afford and what sacrifices you may need to make as a homeowner to live comfortably and continue to save for your future.”

Ways To Save

When it comes to skyrocketing housing prices making it difficult to save enough for a down payment, Haque recommends future home buyers set up automatic transfers each month to a designated TFSA or high interest savings account to start stockpiling a down payment fund.

“While young people may be anxious to start building equity rather than paying rent, waiting until you have a larger down payment can save you thousands of dollars over the life of your mortgage,” says Haque. “First time buyers can also consider the federal government's Home Buyers' Plan, which lets you borrow up to $25,000 from your RSP for a down payment on your first home.”

As for not earning enough to afford monthly mortgage payments, Haque recommends sitting down with a mortgage specialist to crunch the numbers, then taking a mortgage for a test run to see if you can manage the costs.

“Set aside your expected mortgage payments plus all other home expenses for a few months, less your current rent, and see how you do,” he adds. “Over this time, if you find that you are stretched too thin or run out of money before the end of the month, look for ways to cut back on other expenses and keep saving.”

Haque adds that different financing options can help ease the pressure of tighter lending guidelines. “There are a variety of mortgage options such as fixed versus variable interest rate mortgages, short and long term mortgages and cash back mortgages.”

Student Debt Is a Larger Factor

A truly Gen Y and Millennial challenge, student loans can take a while to get under control. While only 2% of Boomers saw that as a barrier, nearly a quarter of Gen Y cites this as an obstacle in the way of homeownership. In fact, RATESDOTCA found that the average Canadian university graduate will take 12 years to save a 5% home down payment while simultaneously paying off their student debt.

“If you are working towards paying off student loans and wish to purchase a home, speak to your bank about how you can best pay down your loan faster and still save for a down payment,” says Haque adding that a good first step in to set up a regular preauthorized transfer of a portion of your paycheque to help bring down the debt.

“Try to gradually increase your repayments over time,” he adds. “Every little bit helps and chances are you may not even miss that extra $5 or $10 a week.”

Andrew Seale

Andrew Seale is a freelance writer with an absurdly hyperactive mind and predilection towards the obscure and eclectic. He frequently shares his personal finance experiences and mishaps with TheDot readers but has also been known to profile business leaders ranging from financial savants to bootstrapped entrepreneurs. His work has appeared in the Globe and Mail, Yahoo Canada Finance and News, Profit Magazine, The Toronto Star, Enroute Magazine, and on the back of napkins sometimes tucked into the pockets of strangers. He can be found at

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