Homeownership dreams dashed for many young Canadians as house prices soar

According to Century 21 Millennium real estate broker Bethany King, millennials trying to buy their first home are up against stiff competition.

“The buyers who are able to offer $200,000 or $300,000 over asking are either getting significant help from their parents or they are baby boomers downsizing,” she told Global News. “The boomers bought their homes for $100,000 decades ago and they’re selling them for $1.4 million, so they have the luxury of being able to put in that big bid.”

When Andrés Peñaloza and his wife Maria Fernanda Gonzalez first immigrated to Canada from Venezuela more than two years ago, they dreamt of a better life, which included owning a home. But after years of looking to buy something that would be suitable for the family they hope to start in Vancouver, they’ve quit searching.

“We’ve seen the bidding wars and houses selling way over asking price. It’s very discouraging,” Peñaloza, who works as a research assistant at the University of British Columbia, told Global News.

With the average home price in Canada jumping 31.6 per cent year-over-year in March, Peñaloza and Gonzalez are part of a cohort of people under the age of 35 who feel that their dreams of homeownership are increasingly out of reach. These millennial prospective buyers have seen their earnings hammered by two major recessions now.

Affordable housing advocates say young workers who remain shut out of the housing market are the collateral damage of policymakers unwilling to make big moves to cool housing prices.

Economists at the Bank of Montreal recently issued a report citing the need to break “market psychology and the belief that prices will only rise further” and “dampen the speculation and fear-of-missing-out that those expectations are creating.”

Several other Bay Street economists have called on governments to do more to tame runaway home prices and the Bank of Canada Governor Tiff Macklem says he sees “worrying” signs in the housing market.

Policy responses to mounting calls have so far been muted.

There are tougher mortgage stress-test rules are set to begin June 1. And though there was a national empty homes tax announced in the April 19 federal budget, as well as funding to build social housing, critics say the measures don’t do enough to tackle the growing problem. Recent budgets for Ontario and B.C.— home to some of the hottest housing markets — did not prioritize housing.

According to Century 21 Millennium real estate broker Bethany King, millennials trying to buy their first home are up against stiff competition.

“The buyers who are able to offer $200,000 or $300,000 over asking are either getting significant help from their parents or they are baby boomers downsizing,” she told Global News. “The boomers bought their homes for $100,000 decades ago and they’re selling them for $1.4 million, so they have the luxury of being able to put in that big bid.”

King says first-timers who don’t have access to “the Bank of Mom and Dad” are up against buyers who have already built up significant equity in their homes.

Ref: Global News

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