he Next Generation of Homebuyers report reveals that many 21–39-year-old Canadians who have yet to purchase a home (next generation homebuyers or next gens) are, on average, delaying their market entry to sometime in the next three to five years. Factors such as heavier student loan debts than any previous generation, and the desire to continue saving for a down payment or await important milestones such as a promotion or marriage are influencing this decision to wait a bit longer.

Thankfully, there is strong interest in homeownership among next generation homebuyers — with 94 percent of non-homeowners surveyed saying they do plan to own a home. This overwhelming majority highlights strong reasons for continued optimism for growth in housing and mortgage markets.

Next generation homebuyers can be segmented into three categories based on their purchase time horizon: imminent buyers, purchasing in the next year; mid-term buyers, purchasing in one to five years; and distant buyers, purchasing beyond the next five years. As they get closer to their purchase decisions, the report shows buyers are better prepared to make an informed decision.

The mortgage broker channel is well-established as a key player in the mortgage industry. It now represents 30 percent of all outstanding mortgages placed in Canada, up from 23 percent in 2009.

The majority of next gens believe in a recovering economy and feel Canadian real estate is a good long-term investment (76 percent), with 72 percent viewing a mortgage as good debt.

Imminent buyers are already saving for their down payment

With average household incomes of $75,000 and average savings of $27,000, 61 percent of next gens expect to make a down payment of less than 20 percent of the purchase price of their home. Not surprisingly, the large majority of imminent buyers (90 percent) have started saving for a down payment, with an average savings of $37,000. Even mid-term buyers have made great progress on their down payments — 72 percent are currently saving with an average of $27,000 set aside.

Increasingly more self-reliant, next gens are also expecting to front their down payments themselves, with 73 percent relying on their own personal savings and only 36 percent depending on gifts or loans from family.

The mortgage broker channel is well-established as a key player in the mortgage industry. It now represents 30 percent of all outstanding mortgages placed in Canada, up from 23 percent in 2009.

Prior to explaining the services mortgage brokers provide, 36 percent say they intend to consult a mortgage broker for their needs. But, once respondents received a brief description of the services a broker provides, the likelihood of use jumps to 59 percent overall. And, probability increases to 75 percent among those who have a good or full understanding of what a broker does.

Whenever housing prices are on the rise, affordability is a key consideration for next generation homebuyers. Still, it’s good to know homeownership remains an affordable goal with the right planning.

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