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Harder for Gen Y first-time home buyers to get into market?

Ashleigh Patterson
Statistics Canada says the biggest yearly increases in June were the metropolitan regions of Toronto and Oshawa, followed by Winnipeg.
Statistics Canada says the biggest yearly increases in June were the metropolitan regions of Toronto and Oshawa, followed by Winnipeg.

Andrew MacLeod is part of demographic that apparently is being priced out of Canada's housing market, but that didn't prevent the 34-year-old from finding a way to buy his first home.

MacLeod and his wife, 33, overcame current economic hurdles such as high property prices, tighter lending conditions and shaky job markets to purchase their four-bedroom, two storey semi-detached house in Ottawa's Lindenlea neighbourhood, which MacLeod cheekily describes as the "rattier" end of the posh Rockliffe Park area.

But with homes costing anywhere between $500,000 and $900,000 in Lindenlea, rattier is a relative term. With frugal spending habits and a little bit of help from family, the couple were able to pull together the money needed for a down payment and buy a house in a neighbourhood they desired.

"We weren't going to break the bank just to buy something for the sake of buying it," says MacLeod of the house purchase last summer.

"If it wasn't something that was realistic, it wasn't going to be something I was going to stress out over."

Gen Y hurdles

This week, a TD Canada Trust poll of some 6,000 Canadian adults revealed it's harder for Gen Y, or Millennials, to get into the market than 30 years ago. Not a great finding when you think of the societal pressures to own a home and the negativity around renting.

Roughly half of Gen Y non-homeowners say prices are way too high, compared to 16 per cent of Boomers. Slightly more than half of Millennials also say they are concerned they won't be able to save enough for that first down payment, the survey showed. Furthermore, nearly half feel they aren't earning enough to pay their mortgages versus some 13 per cent of Boomers.

Given those challenges, MacLeod knows he's lucky to have a home, even though finances can be a strain. He lives comfortably, but keeps tight tabs on spending. He and his wife don't own a car; they don't plan on having kids any time soon. Excluding the mortgage, the couple is debt-free.

Know your finances

That is a rarity at a time when household debt is at record levels. Last summer, the federal government tightened mortgage-lending rules -- the fourth in as many years -- to cool the country's housing market on concerns it was getting frothy, while also forcing Canadians' to get a grip on their debt.

But the reality is the situation is different for everyone.

One recent survey showed there's a rise in the number of first-time buyers who are slapping down more than 20 per cent for their down payments. Another noted Canadians planning to buy their first home in the next five years plan to spend about $300,000, with an average down payment amount of $48,000, or 16 per cent.

While daunting at first, homeownership is ultimately attainable, says Farhaneh Haque, director of mortgage advice at TD Canada Trust.

Knowing exactly how much you can afford and what sacrifices you may need to make as a homeowner to live comfortably, and continue to save for your future, is key before leaping into the market, he adds.

That's exactly MacLeod's recipe. He wants to be mortgage free by his 50s; he wants to buy a cottage.

"We've had to make certain choices and forego certain things like a car, like lavish trips. We live well," he says. "We are adamant about not taking on new debt."