While most millennials who rent or live with family say they dream of owning a home one day, few are adequately planning for it, according to a CIBC poll released last week.
Forty-six per cent of Canadians ages 18-37 say they intend to buy a home within the next five years, but 76 per cent haven’t started to save or have accumulated less than a quarter of their down payment, says the CIBC research.
Financial planning is key
"Our survey reveals that few millennials are taking the necessary steps to make the move to homeownership," says Grant Rasmussen, senior vice president, Mobile Advice, CIBC. "You can't buy a home with intent and desire alone. It's important to have a financial plan to make the most of your income and set yourself up with the right savings plan to achieve your goals now and in the years ahead."
Forty-two per cent of millennials rent, and 23 per cent live with family or others. Almost all of them (94 per cent) say they intend to buy a home someday, however, 45 per cent of renters and 39 per cent of those living at home see the appeal of being a homeowner, but do not think it is realistic or desirable anymore.
Rising interest rates
Thirty-five per cent of millennials are homeowners. Of those, 58 per cent worry that rising rates will affect their ability to manage current household expenses, and three quarters say being a homeowner has a downside and comes at a social cost: fewer social gatherings and longer commutes to visit friends or family.
"While most still dream of owning a home one day, higher house prices, the prospect of higher rates, and new qualifying rules are prompting some millennials to pause and question whether being a homeowner is realistic or even desirable for them," says Rasmussen. "The key is to understand your total housing costs and start planning early so you can consider your rent versus buy options in the context of your overall financial plan and desired lifestyle."