Wondering how millennials are finding breaking into the housing market? A global survey released this week by HSBC of over 9,000 millennials in nine countries can answer that question. The survey provided insight into peoples’ attitudes and behaviour toward home buying, renting and funding in Canada, Australia, China, France, Malaysia, Mexico, the UAE, the U.K. and the U.S.
Some key findings? Turns out that a little over a third of Canadian millennials—those aged 18 to 35— polled already owned their own home (versus 40% globally), and—among those who didn’t—more than four out of five (or 82%) intended to buy one in the next five years. This is slightly more than the 70% of Canadians across all generations surveyed.
As well, nearly three-quarters, or 73%, of Canadian millennials who planned to buy soon said they hadn’t started saving for a down payment yet, while 25% of those 18 to 35 said they hadn’t sat down and drawn up any kind of budget yet. Even amongst those who said they’d managed to buy a home in the past two years, 42% admitted to spending more than anticipated. Some other findings from the study include:
- 21% of millennials borrowed from the “Bank of mom and dad” to pay for unexpected expenses such as closing costs, mortgage insurance and legal fees after they had purchased a home while 10% borrowed from friends
- 21% moved back in with their parents before buying a home to save for one. “The reality is, it’s a challenge,” said Larry Tomei, HSBC Canada’s head of retail banking, “so I can’t stress enough the importance of having a good plan that includes getting the right financial services advice and support before and after you buy.
- 59% of millennials intending to buy would consider spending less on leisure activities and going out. In fact, millennials were fine with making sacrifices in order to be able to afford a modest home. About 55% said they would spend less on lesiure, 33% said they would buy a smaller place than they would ideally like, 21% would delay having kids, 21% would rent out a room to help pay the bills, and 17% would move in with a relative to save for a deposit.
The survey also showed that the meaning of home is changing as our homes become places to work as well as places to live. In fact, 48% of millennials in Canada work from home and 33% would like to, whereas just 29% of baby boomers work from home and only 18% would like to.
If you’re a millennial interested in buying a home, here are a few things you can start doing now to achieve your dream sooner.
- Pay yourself first. Set up an automatic monthly deduction from your paycheque to a TFSA or RRSP so your money for a down payment builds slowly but surely. (The RRSP offers the Home Buyers’ Plan for first-time buyers).
- Consider taking on a part time job so you can also add that money to your down payment savings. A little goes a long way this early in the game.
- Cut back on your day-to-day spending as much as you can and add that money to savings. That could mean walking or biking to work to save on transportation costs, bringing your lunch to work several days a week, bypassing the gym and walking places instead, etc.
- Consider buying your first home with a friend or family member to cut down on the down payment needed
- Check out mortgage calculators to find out how much of a mortgage you’d be able to get
- Don’t forget to add one-time purchase costs to your total, including fees for real estate, mortgage insurance and an inspection as well as moving fees and legal fees—all of which could add thousands of dollars to the final tally.
Finally, seek out advice from a trusted family member, financial advisor or anecdotally from friends who’ve already bought. Anything that sheds light on the process will be of benefit in the long run.