Almost half of millennials say owning home a 'pipedream'

With skyrocketing home prices in Canada (especially in Vancouver and Toronto), 46% of millennials say home ownership is a pipedream, according to KPMG’s Millennials and Retirement report. The consulting firm’s survey polled 2,500 Canadians, including 1,000 millennials (age 23-38).

Even though 72% of millennials say their goal is home ownership, prohibitive costs put it out of reach for most of them, especially in “squeezed” urban centers. Though millennials have higher incomes than previous cohorts due to higher educational attainment, the modest wage increase in no way matches housing price inflation in the past 20 years.

Debt-to-income ratio for young millennials stands at an average 216%, far higher than the 125% for Gen X and 80% for boomers, driven largely by mortgage debt.

Millennials have to save for an average of 13 years to make a 20% down payment, while it took their parents just five years to do so in 1976.

“The combination of rising house prices, high levels of personal debt, and annual incomes that are just a fraction of the cost of buying a home compared with their parents’ generation, is pushing the dream of home ownership out of reach for many millennials,” Martin Joyce, partner and national leader, human & social services, KPMG, said. “This is particularly challenging in the markets of Vancouver and Toronto.”

The inability to realistically purchase a home is also threatening retirement stability, with home ownership traditionally a key pillar in funding Canadian retirement plans.

Sixty-five percent of millennials said they worry if they buy a home and delay their savings, they won’t have enough money saved for retirement. “What we are seeing is that millennials face a choice today that their parents' generation didn't," Joyce said. "They either buy a home or focus on saving for retirement. Buying a home involves taking on considerable debt because house prices are so high in relation to incomes, and that limits millennials' ability to save.”

When asked to look ahead to 2050 and their retirement future, millennial opinions were bleak. Ninety percent said they believe people will remain in the workforce longer, and 84% believed the retirement age will be higher than 65.

"We're concerned that millennials will not be in the same position to retire as the generations that preceded them were. A variety of factors is hampering their ability to accumulate more wealth and prompting calls for government reform," Joyce concluded.