Market watchers are keeping a close eye on the challenges facing first-time buyers like Millennials and Gen-Xers, but Boomers are still a significant influence.
Much of the concern about first-time buyers centres on the tougher mortgage stress test that took effect June 1st. But industry insiders are saying that is a small consideration compared to the record setting prices for homes.
“That’s likely going to be the bigger impact on buying…if you take a look at the big picture, [the stress test] pales in comparison to the cost of housing, which is driven by market forces,” says Canadian Mortgage Brokers Association CEO Samantha Gale.
Gale says a lack of inventory is a key problem. “Our supply issues continue to be the number one challenge. We still have supply controlled primarily by municipalities, [which] have a spotty record in terms of approving building developments,” she said.
Gale, and others, say the fact that prices are simply too high can be seen in the lack of uptake for the federal government’s First-Time Home Buyer program. The 3-year, $1.25 billion incentive plan has seen just $170 million in approvals since it was launched in September 2019. That is even with special allowances for the country’s most expensive markets: Vancouver, Victoria and Toronto.
There is still some hope that younger, first-time buyers will be able to take advantage as Boomers change their lifestyles. A new Royal-LePage survey suggests that more than 3-million Boomers intend to buy a home in the next five years. Most won’t be downsizing though. Many want to enjoy their retirement in bigger, quieter properties outside the city.