In new figures that aren’t a shock to anyone, Manulife Bank's bi-annual Debt Survey found that seven out of ten Canadians (71%) who don’t own a home worry about their ability to save up for one.
Of those, 39% worry a lot about this.
After all, house prices have reached record highs in the past year and show no signs of moving in the opposite direction.
Of those surveyed, two-thirds (67%) worry about housing prices in their local community, suggesting they believe they might have to move to another community if they decide they want to buy a new home.
The past year has indeed seen countless young people swap Toronto’s concrete and sky-high housing prices for suburbia and smaller towns -- some, for another province all together.
Of homeowners surveyed by Manulife, one-third (33%) admit that they needed -- and received -- help from their parents to purchase their home. This includes nearly half of Generation Z (47%) and Millennial homeowners (46%).
Shutterstock
"With the housing market pricing many Canadians out of the market, younger generations are forced to turn to their parents to close the gap," said Rick Lunny, President and CEO, Manulife Bank. "Although this can be an effective short-term solution, it can actually be exacerbating the problem. That's why it's so important to have financial flexibility, especially when it comes to purchasing a home, no matter the financial environment."
Another factor exacerbating the problem, of course, is that wages haven’t increased at the same rate as home prices -- and the cost of living is only increasing. Three-fifths (61%) of Canadians surveyed report that the cost of living for their household has increased over the past year, and very few (7%) think the cost of living for their household has decreased.
There’s obviously nothing overly optimistic about those figures, especially for those who can’t rely on the bank of mom(s) or dad(s) for a down payment. While Generation Z and Millennials were much more likely to report having purchased a new home during the pandemic (with the pandemic serving as a catalyst), many note they owe it to their parents. Tellingly, nearly one in ten (7%) parents surveyed have helped their adult children purchase a home during the pandemic.
It wasn’t just wealthy parents with hundreds of thousands of dollars in their bank accounts waiting to be spent, either. As many as five percent (5%) of those who have a mortgage used equity from their own home to help their adult children purchase a home.
In terms of the next generation, 85% of those who have young children are worried about the future affordability of real-estate, when their children are ready for home ownership.
"Our survey findings show 72 per cent of Canadians admit they do not have a written financial plan and just one-third (35 per cent) of those who are in debt have established a strategy to repay their debts," said Lunny. "Identifying where your money goes, finding ways to save more, and minimizing your current spending can help you feel more in control of your money matters to achieve larger goals like home ownership."
In further less-than-ideal findings, the survey found that more than half (51%) of Canadians with mortgages worry about making their mortgage payments.
(***cue a call home to the parents***).
