“The biggest finding is that people are not discouraged about home ownership, particularly as first-time home buyers,” said Nicole Wells, vice-president of home equity financing with RBC.
That’s a stark shift from housing market reports coming into the new year, which painted a rather dark picture of the affordability of owning a home in Canada. January was the first month in which the Canadian housing market had to deal with new federal mortgages rules, which saw sales drop by 14.5 per cent compared to December, while prices slipped 2.4 per cent, according to data released on Thursday by the Canadian Real Estate Association.
Millennials are half of prospective home buyers over next 2 years
According to the poll, 84 per cent of millennials believe that purchasing a home is a good investment, which is up five percentage points from last year. Furthermore, of the 32 per cent of Canadians who are likely to purchase a home in the next two years, millennials make up half.
“Canadians continue to feel optimistic about getting into the housing market despite changes in government regulations. They’re taking a more informed journey to home ownership by starting with affordability,” said Wells.
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As intentions to buy a home continues to climb in Canada, 35 per cent of those surveyed indicated that they’d be receiving financial assistance from family for the down payment. Wells explained that while this percentage applied to Canadians as a whole, millennials can find themselves particularly strapped in the midst of Canada’s rising interest rates and property prices.
To combat rising prices, Wells says Canadian millennials are proving “savvy” so far when it comes to getting where — and what — they buy.
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“A lot of millennials are pretty smart and savvy. They’re going into condos and townhouses and finding creative ways to get into a home,” explained Wells.
“They’re growing up,” explained Wells. “They understand their finances more now than ever. They’re thinking about starting families and it’s hard to do that in your parent’s basement.”
How do I know if I can afford it?
Th poll went on to offer several tips to Canadians looking to jump into the housing market — the primary one being scenario planning.
“Scenario planning is a big one,” said Wells. “I don’t think people do this enough. Many people overestimate the cost of living and costs of having a home. People can actually overestimate their budgets by 20 to 30 per cent.”
To remedy this, Wells recommends that prospective homebuyers plan out a few scenarios to help them visualize where they’ll be in a few years and whether or not they’ll still be able to afford rising living costs.
“If you plan to have children in the future, buy a new car or own a business, make sure you have a few scenarios aligned with your dreams. Factor these scenarios into your home-buying aspirations,” reads the study.
RBC Home Ownership Poll conducted by Ipsos from Jan. 9 – Jan, 24, 2018 on behalf of the Royal Bank of Canada, through a national survey of 2,000 Canadians ages 18+ who completed their surveys online. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled.