In what was a long, cold winter for Toronto’s property market, realtor Tom Storey barely felt a chill.
As sales of single-detached homes slumped, Storey’s downtown clientele of young buyers continued their pursuit of more affordable condominiums, picking them up at a heated clip.
“Millennials are probably 60 per cent of my business now so things didn’t slow down,” Storey said. “There’s definitely an eagerness in that age range to get into the market because a lot of them have been renting or living with their parents and they’re worried if they don’t get in, they’ll get priced out of the market.”
After a winter of depressed sales volumes in most markets, millennials are at the forefront of an overall increase in buying intentions across the country, according to RBC’s annual homeownership poll.
One third of Canadians say they are very likely or somewhat likely to buy a home in the next two years — an increase of seven points from last year and the highest level since 2010, according to the bank’s survey of 2,093 Canadians conducted by Ipsos.
Millennials showed the strongest intention to buy, with 50 per cent of those aged between 18 and 34 saying they were very or somewhat likely to purchase within the next couple of years.
“Millennials have shown their confidence in both the economy and job market and are leading the charge in home purchase intentions across Canada,” said Nicole Wells, vice president of home equity financing at RBC. “Young Canadians are getting creative in finding ways to get the keys to their home by getting help from their families and doing their homework well in advance of stepping foot on a property.”
The overall boost in homebuying intentions comes after a tough winter for many real estate markets, as Canadians continue to adjust to rising interest rates and the tougher mortgage qualification rules.
Of those surveyed by RBC, 61 per cent were very or somewhat concerned about interest rate increases, up 10 per cent over last year. And over half of respondents said new lending guidelines issued by the Office of the Superintendent of Financial Institutions (OSFI) were affecting their purchasing decisions, with 25 per cent making larger down payments and 19 per cent delaying home purchases.
Across Canada, year-over-year home sales fell 16.9 per cent in February and were down in almost three quarters of all local housing markets during the month, according to the Canadian Real Estate Association. But the overall picture belied variations in market performance across the country.
The slump was particularly heavy in Toronto with sales plummeting 35 per cent in February compared to the same period a year ago, when a roaring market and double-digit price increases prompted regulators to introduce a range of measures designed to curb demand. Average home prices fell 12 per cent in February compared to a year ago, with single-family home sales plunging while condominiums posted strong gains, according to figures from the Toronto Real Estate Board.
Meantime, home sales in Montreal grew five per cent year over year in February, with condominium sales jumping 14 per cent while the number of single-family homes changing hands rose 1 per cent. Sales in Vancouver also soared, prompting the province to introduce a suite of new measures there in February.
“The market here is shifting really fast,” said Bahador Abadi, a broker with Century 21 in Montreal. “It used to take months for a high-rise of condos to sell. Now they go in weeks or even days.”
Analysts and realtors have cautioned that the figures for Toronto look particularly grim compared to the overheated conditions in 2017 and have predicted a more normal pace of growth to return in the second half of the year.
“I think we’ll see a more healthy level of demand in all housing types but not a boom like we saw last year,” said Storey. “It’s more expensive to get into the market, interest rates are higher and the government interventions are still in place.”
The strength in millennial buying intentions was driven by increased confidence in the economy and their own job security, with 47 per cent reporting less anxiety about employment compared to 36 per cent in 2017, according to the RBC poll. As intentions to buy rose, 35 per cent of those polled indicated they had or would receive financial assistance from family for a down payment.
Among Storey’s youthful clientele the figure is even higher, as parents sell larger homes to secure the down payments that give their kids a leg up on the property ladder.
“I’d say about 75 per cent of my clients are getting help from their parents,” he said. “They’re at the perfect age where their parents are ready to downsize.”
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