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Young renters are poised to purchase

Saturday, March 24, 2007
Gail Swainson
Real Estate Reporter

Melissa Cassar is young, single and a renter, but not for long.

According to a recent poll done for Genworth Financial Canada, Cassar is one of thousands of young Canadians poised to make the biggest single purchase of their lifetime: a home of their own.

"I think it's time for me to purchase and I'm not prepared to wait until I get married," said Cassar, a consultant with Veritas Communications.

"Most of my friends think the same," the 28-year-old Cassar added. "And now I know I don't have to save up the whole down payment. There are options out there for me."

The poll – part of a report done for Genworth by the Gandalf Group called the First-Time Homebuyer's Monitor – canvassed 1,000 renters across Canada. It is accurate to a margin of plus or minus 5 per cent.

Genworth provides mortgage default insurance that allows buyers to purchase with lower down payments.

Peter Vukanovich, president of Genworth Financial Canada, said mortgage insurance offers new buyers a way to get into the market before they are able to set aside the traditional 2.5 per cent down payment.

"The good news is you can get the house now and start building equity," Vukanovich said. "This means renters can opt to get into home ownership sooner."

Vukanovich said single women like Cassar are purchasing their own homes in ever increasing numbers.

"Single women aren't waiting to buy, they see the value in becoming a homeowner and beginning to build equity," he added.

This is a trend also noted by Brenda Bouw, author of a new book Home Girl: The Single Woman's Guide to Buying Real Estate in Canada (2007, $17, John Wiley & Sons).

"More single women than ever before are deciding to invest in themselves through home ownership," Bouw said in a statement.

Key findings of the poll include:
  • About one-third of those polled said they are currently considering a home purchase.
  • Most of the renters polled, or some 87 per cent, viewed a home purchase as a good investment.
  • Some 83 per cent of those polled said waiting to get married did not factor into any decision to buy.
  • Twenty-three per cent of those households polled earn more than $50,000. Of those, 56 per cent said they are considering a home purchase.
  • About two-thirds – or 66 per cent – of the total number of renters polled said they plan to purchase a home within the next two years.
Currently, some four million of 12 million Canadian households rent, according to Statistics Canada.

Almost a half of these four million households are made up of renters between 18 and 34 years.

There are typically several barriers preventing renters from joining the ranks of homeowners, the report said.

These include saving enough for a down payment and rapidly increasing prices in Canada's major cities such as Toronto, Vancouver and Calgary.

The New Home Monitor report also analyzed additional data from 100,000 homebuyers across the country with mortgages insured by Genworth.

This separate data survey showed that mortgage payments as a percentage of income have increased to more than 19 per cent in 2006, from 17.2 per cent in 2002.

The price of a first-time buyer's home in 2006 averaged 222,000 with an average mortgage payment of $1,260. The average age of first-time buyers has continued to decline, to 32.5 years, the survey also showed.