Money Milestones: How to make your dream of owning a home a reality in 2022

It may be possible if you’re willing to get creative, experts say

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MONETARY MILESTONES: In an ongoing series, the Financial Post explores personal finance issues related to major life milestones, from marriage to retirement.


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Buying a home has never been so difficult and this is especially true for millennials.

This generation was born into a recession, tried to enter the workforce during a financial crisis, and are now trying to settle down and own a home during an economic crisis and pandemic.

Do not be mistaken. The pandemic has certainly made matters worse for this 25-34 year old group. Housing affordability in Canada continues to deteriorate, with homeownership now accounting for 46.5% of average household income, according to the National Bank of Canada.

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To put this in perspective, it is recommended that home ownership never be more than 25% of your income. Still, this situation is not likely to go away anytime soon, said Robert Hogue, senior economist for RBC Economics.


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“Prices in some places have increased year over year by 30% and sometimes 40%,” he said. “We haven’t seen the kind of wage increases that would match rising house prices at just about every level in Canada. “

The median income of Canadian households remains around $ 62,000, according to Statistics Canada in 2019. However, the average household spends around $ 68,000. This makes it almost impossible to own a home given the high cost of a mortgage, along with all of the other household bills.

It’s like waving in the wind

James mccreath

But it can be possible if you’re willing to get creative, said James McCreath, portfolio manager and senior investment advisor at BMO Private Wealth.

“The first step is to prepare a family budget and that gives you the framework of what you can afford, and to look at your monthly entries and exits,” he said. “Then you can start building that down payment… it’s not easy unless you have a budget. It’s like waving in the wind.


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From there, McCreath said there are new ways for young people to start putting down money for a down payment. For example, side activities have become more and more popular, with some people renting out parking spaces and storage units, and others finding a passion project paying off.

“People are really open to these side jobs,” he said. “Write a list of your strengths and areas that interest you and I think the possibilities are endless. “

But not everyone has the time or energy after work to start an extra gig. There are also tax implications once you open a small business. Instead, Hogue recommends viewing today’s work-from-home economy as an opportunity.

“Because of working from home, it allows some Canadians to think of other cities or markets to fulfill their dreams of homeownership,” he said. “Employers are much more flexible. Time will tell if this is a permanent avenue to owning a home, especially in the markets which are very expensive.


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You drive until you qualify

Robert hogue

But even though major markets remain expensive, millennials and young people continue to flock to them. In 2018, about 88% of millennials lived and worked in metropolitan areas, according to Pew Research. This pushed homeownership into the background and increased rental costs.

Housing supply remains close to all-time lows in almost all markets, according to a research report from Hogue, and the pandemic has only made it more difficult to access the housing market. He expects this to continue in 2022.

With that in mind, Hogue recommends that perhaps it is time to reconsider your options if home ownership is your dream. If you want a downtown Toronto home with a back yard, you might want to consider a townhouse or a semi-detached house. Or, you can keep driving until you find a market you can afford.


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“You drive until you qualify,” he said. “This will mean longer distances than in the past. And some will have to settle for condominium apartments.

If you absolutely need a home, one way to help with the down payment is to use the savings you already have. If you are a Canadian who has added to their Registered Retirement Savings Plan (RRSP), you can use up to $ 35,000 as a first-time homebuyer with the Home Buyers‘ Plan. You then have 15 years to repay it, tax-free.

This repayment plan would also help in another area where millennials struggle: credit. Living at home longer than previous generations means there is less evidence that you will be paying your bills.

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“Young people can have car payments, student debt, all of which meet the loan conditions to build credit,” Hogue said. “Like any form of credit you have, such as credit cards and lines of credit, you need to stay up to date on your payments. Pay it back in an orderly fashion and it will tell lenders you can count on.

Of course, you can still fail even after you’ve created a budget, accumulated credit, used up available savings, and put money aside each month. That’s when Hogue and McCreath say maybe it’s time to visit Mom and Dad’s bank.

“If you tell them, ‘I’ve budgeted, I’ve got a plan, I’m committed to it, and I’m setting aside that amount of savings,’ it just shows that you are very well prepared and that the the conversation will be much easier when you ask for money, ”he said.

If you still don’t have enough, even after doing this exercise, choosing to rent over owning a home certainly isn’t a failure. Many need to stay downtown for work or they just enjoy the city lifestyle. If so, staying put is definitely an option.

“There is a cultural component to homeownership, which is very strong in North America. But if you look around the world, there isn’t such a strong trend towards home ownership, ”Hogue said. “There could be a cultural shift towards rental… and it’s not necessarily some kind of failure.

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