Reality Bites: Generation Y Moving Home to Break Into the Real Estate Market



    Unprecedented number of 21 to 34 year olds living with mom and dad

    TORONTO, April 17 /CNW/ - Here's some news that might make parents
nervous. A BMO Bank of Montreal new survey of potential first-time homebuyers
found that 29 per cent of Canadians between the ages of 21 and 34 are living
with their parents while saving for their home down payment. In Canada's
biggest cities, such as Toronto and Vancouver, the numbers are significantly
higher, suggesting that staying on at the old homestead is considered the
fastest route to jumping onto the property ladder.
    The BMO survey, conducted by Decima Research, polled 1,205 young adults
aged 21 to 34 from Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver
who had aspirations to purchase a home in the 'near' future. According to the
survey, almost one in three are living with their parents while they prepare
to make the transition to home ownership.
    While it is no surprise that Canadians under the age of 30 are staying
home longer, whether to attend school or save for a home purchase, what is
surprising is the number of Canadians in the 31 to 34 years old category who
are also still at home. According to the survey, the Greater Toronto Area
(GTA), Halifax and Calgary have the highest percentage of 'stay-at-homes' who
are older than 31 years of age (22 per cent in the GTA and 17 per cent in both
Halifax and Calgary).
    "A red hot real estate market and rising home prices have likely
contributed to this trend," said Cid Palacio, Vice President, BMO Bank of
Montreal. "But these factors may also contribute to a sense of urgency amongst
young first-time homebuyers who feel they don't have the requisite finances
and may have to scramble to cobble together a down payment. Some of this
anxiety may be avoidable by developing a financial plan early that sets
realistic short-term and long-term financial goals."
    Palacio noted that the BMO survey found a considerable gap between
potential first-time buyers' expectations and their realities when it came to
planning and saving to buy a home. "We found that, although most young
Canadians would like to purchase a home within the next few years, most do not
have a practical plan to get there."
    According to the survey, Canadians between the ages 21 and 34, on
average, have been saving for their down payment for only 1.6 years yet expect
to take only a total of 3.8 years to save enough to commit to a purchase.
    "On average, young Canadians told us they expected to be able to amass a
down payment representing 15.4 per cent of the cost of a new home by the time
they are ready to make a purchase," said Palacio. "I'm concerned, however,
that these expectations are unrealistically high given their low savings rate
and the increasing cost of housing in markets across the country.

    Other findings include:
    
    -   30 per cent of all those with home ownership aspirations intend to
        take advantage of the First Time Home Buyers RRSP Plan as a major
        source of funding for the down payment.
    -   60 per cent intend to rely primarily on savings or investments to
        make the purchase.
    -   The average reported savings rate (as a percentage of pre-tax income)
        of young Canadians polled breaks down as follows:
        -  Across Canada -- 12.5 per cent.
        -  In Toronto  -- 14.3 per cent
        -  In Vancouver -- 13.3 per cent
        -  In Halifax and Winnipeg -- 8.8 per cent
        -  Who live at 'home' with their parents -- 16.6 per cent
        -  Who are currently renting -- 11.0 per cent
    

    "If the study reinforces one thing it is that more young Canadians need
to sit down with a financial planning professional to develop a realistic game
plan, if they are going to shorten their stay with their parents and make
their home ownership dreams a reality," said Ms. Palacio.
    Ms. Palacio states that there are a number of steps which young Canadians
should take in order to reach their home ownership goal sooner. She recommends
that first of all they consult a financial professional as early as possible
to put together a financial plan that addresses both their short and long term
goals. This plan should address steps such as how to pay off debt sooner in
order to free up more cash flow for their home down payment and developing a
working monthly budget.
    This poll, conducted by Decima Research from March 1 to March 9, 2007,
was based on a randomly selected sample of 1205 Canadians 21 to 34 years old
who do not currently own their own home from six major Canadian cities
(Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver) using Decima's
proprietary online panel. With a sample of this size, the results are
considered accurate to within +/- 2.9 percentage points, 19 times out of 20.

    
    A1_colm1. How many years do you anticipate it will take to save for a
    down payment on your first home?
    BASE: Those with plans to purchase.

                    ---------------------------------------------------------
                                              City
                    ---------------------------------------------------------

              Total  Halifax  Montreal  Toronto  Winnipeg  Calgary  Vancouver
              -----  -------  --------  -------  --------  -------  ---------

    Total      100%     100%      100%     100%      100%     100%       100%
    Unweighted
     'N'       913      167       172      189        65      149        171
              ---------------------------------------------------------------
    3 years
     or less    57%      32%       54%      63%       52%      64%        46%
    4 to 5
     years      29%      51%       30%      25%       24%      24%        35%
    6 to 10
     years      13%      16%       14%      10%       24%      10%        18%
    11 years
     or more     2%       2%        2%       1%                 2%         2%
              ---------------------------------------------------------------
    MEAN       3.8      4.6       4.0      3.6       4.3      3.3        4.2
    MEDIAN     3.0      5.0       3.0      3.0       3.0      2.0        4.0
              ---------------------------------------------------------------

    A1_colm1. How many years do you anticipate it will take to save for a
    down payment on your first home?
    BASE: Those with plans to purchase.

                      -------------------------------------------------------
                       Housing Status     Gender                Age
                      -------------------------------------------------------
               Total    Rent  Parents   Male  Female   21-25   26-30   31-34
               -----    ----  -------   ----  ------   -----   -----   -----

    Total       100%    100%     100%   100%    100%    100%    100%    100%
    Unweighted
     'N'        913     648      246    320     593     357     349     207
              ---------------------------------------------------------------
    3 years or
     less        57%     56%      59%    57%     56%     50%     53%     67%
    4 to 5
     years       29%     30%      25%    29%     28%     28%     32%     25%
    6 to 10
     years       13%     12%      15%    13%     14%     19%     13%      8%
    11 years
     or more      2%      2%       1%     2%      2%      2%      2%      1%
              ---------------------------------------------------------------
    MEAN        3.8     3.8      3.8    3.7     4.0     4.2     4.1     3.1
    MEDIAN      3.0     3.0      3.0    3.0     3.0     3.0     3.0     2.0
              ---------------------------------------------------------------

    A3_M. What percent down payment do you anticipate being able to afford
    when you are ready to buy?
    BASE: Those with plans to purchase.

                    ---------------------------------------------------------
                                              City
                    ---------------------------------------------------------

              Total  Halifax  Montreal  Toronto  Winnipeg  Calgary  Vancouver
              -----  -------  --------  -------  --------  -------  ---------

    Total      100%     100%      100%     100%      100%     100%       100%
    Unweighted
     'N'       998      166       193      195        81      167        196
              ---------------------------------------------------------------
    0%           1%                 1%       1%        1%       1%       less
                                                                         than
                                                                          .5%
    1% to 5%    12%      10%       17%       8%       22%      18%         9%
    6% to 10%   29%      41%       35%      23%       24%      27%        33%
    11% to 15%  19%      19%       17%      19%       28%      17%        17%
    16% to 20%  12%       9%       11%      11%        9%      13%        17%
    21% to 25%  15%      13%       10%      21%        9%      13%        11%
    26% to 30%   7%       1%        4%      10%        1%       5%         6%
    31% to 40%   2%       2%        3%       2%        1%       1%         1%
    41% to 50%   2%       1%        1%       3%        2%       4%         1%
    51% to 60%   1%       1%                 1%        2%     less         2%
                                                              than
                                                               .5%
    61% to 70% less     less        1%                        less
               than     than                                  than
                .5%      .5%                                   .5%
    71% or
     more        1%       2%        1%       1%        1%                  2%
    MEAN      15.4     14.8      13.3     17.3      13.2     14.2       15.8
              ---------------------------------------------------------------

    A3_M. What percent down payment do you anticipate being able to afford
    when you are ready to buy?
    BASE: Those with plans to purchase.

                      -------------------------------------------------------
                       Housing Status     Gender                Age
                      -------------------------------------------------------
               Total    Rent  Parents   Male  Female   21-25   26-30   31-34
               -----    ----  -------   ----  ------   -----   -----   -----

    Total       100%    100%     100%   100%    100%    100%    100%    100%
    Unweighted
     'N'        998     717      262    355     643     373     388     237
              ---------------------------------------------------------------
    0%            1%      1%     less
                                 than
                                  .5%
    1% to 5%     12%     13%      11%     1%      1%      1%      1%    less
                                                                        than
                                                                         .5%
    6% to 10%    29%     31%      23%    10%     15%     10%     15%     12%
    11% to 15%   19%     18%      21%    28%     30%     30%     28%     29%
    16% to 20%   12%     12%      13%    22%     15%     22%     18%     15%
    21% to 25%   15%     15%      15%    13%     11%     15%     11%     11%
    26% to 30%    7%      6%      10%    14%     15%     11%     15%     18%
    31% to 40%    2%      2%       2%     6%      7%      5%      6%      8%
    41% to 50%    2%      1%       4%     2%      2%      2%      2%      2%
    51% to 60%    1%    less       2%     1%      3%      2%      1%      3%
                        than
                         .5%
    61% to 70%  less    less              1%    less      1%      1%
                than    than                    than
                 .5%     .5%                     .5%
    71% or more   1%      1%     less   less    less      1%
                                 than   than    than
                                  .5%    .5%     .5%
    MEAN       15.4    14.9     16.7      1%      1%    less      1%      1%
                                                        than
                                                         .5%
              ---------------------------------------------------------------

    A4_M. Major source of funding for down payment.
    BASE: Those with plans to purchase.

                    ---------------------------------------------------------
                                              City
                    ---------------------------------------------------------

              Total  Halifax  Montreal  Toronto  Winnipeg  Calgary  Vancouver
              -----  -------  --------  -------  --------  -------  ---------

    Total      100%     100%      100%     100%      100%     100%       100%
    Unweighted
     'N'      1092      200       202      202        96      179        213
              ---------------------------------------------------------------
    Savings/
     invest-
     ments      60%      65%       59%      58%       67%      66%        60%
    First Time
     Home
     Buyer's
     RRSP Plan  30%      29%       30%      34%       25%      18%        30%
    Gift from
     family or
     friends     4%       2%        4%       4%        1%       8%         2%
    Inheritance/
     Insurance   3%       2%        6%       1%        3%     less         3%
                                                              than
                                                               .5%
    Loan from
     family or
     friends     3%       2%        1%       2%        1%       6%         5%
    Bank loan/
     line of
     credit    less                                    4%
               than
                .5%
    Other      less     less      less                          1%       less
               than     than      than                                   than
                .5%      .5%       .5%                                    .5%
              ---------------------------------------------------------------

    A4_M. Major source of funding for down payment.
    BASE: Those with plans to purchase.

                      -------------------------------------------------------
                       Housing Status     Gender                Age
                      -------------------------------------------------------
               Total    Rent  Parents   Male  Female   21-25   26-30   31-34
               -----    ----  -------   ----  ------   -----   -----   -----

    Total       100%    100%     100%   100%    100%    100%    100%    100%
    Unweighted
     'N'       1092     766      305    368     724     441     408     243
              ---------------------------------------------------------------
    Savings/
     invest-
     ments       60%     58%      65%    61%     59%     70%     56%     54%
    First Time
     Home
     Buyer's
     RRSP Plan   30%     32%      27%    29%     32%     18%     36%     37%
    Gift from
     family or
     friends      4%      5%       2%     3%      4%      2%      4%      5%

    Inheritance/
     Insurance    3%      3%       2%     4%      2%      5%      2%      1%
    Loan from
     family or
     friends      3%      2%       4%     3%      2%      4%      2%      3%
    Bank loan/
     line of
     credit     less    less     less   less            less    less
                than    than     than   than            than    than
                 .5%     .5%      .5%    .5%             .5%     .5%
    Other       less    less     less             1%    less    less    less
                than    than     than                   than    than    than
                 .5%     .5%      .5%                    .5%     .5%     .5%
              ---------------------------------------------------------------
    

    About BMO Financial Group
    Established in 1817 as Bank of Montreal, BMO Financial Group is a highly
diversified North American financial services organization. With total assets
of $356 billion as at January 31, 2007, and more than 35,000 employees, BMO
provides a broad range of retail banking, wealth management and investment
banking products and solutions. BMO Financial Group serves clients across
Canada through its Canadian retail arm, BMO Bank of Montreal and through its
wealth management firms BMO Nesbitt Burns, BMO InvestorLine and BMO Harris
Private Banking. BMO Capital Markets, our North American investment and
corporate banking division, provides a full suite of financial products and
services to our North American and international clients. In the United
States, BMO serves clients through Chicago-based Harris, an integrated
financial services organization that provides more than one million personal
and business clients with banking, lending, investing, financial planning,
trust administration, portfolio management, family office and wealth transfer
services.





For further information:

For further information: Michael Edmonds, Toronto,
michael.edmonds@bmo.com, (416) 867-3996; Lucie Gosselin, Montreal,
lucie.gosselin@bmo.com, (514) 877-1101; Laurie Grant, Vancouver,
laurie.grant@bmo.com, (604) 665-7596

Organization Profile

BMO BANK OF MONTREAL

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890