The unstoppable rise in home prices in the GTA and Hamilton is persuading more 20-to-40 something buyers now is the time to jump in for fear they if they don’t they’ll be locked out of the market for good.
An Ipsos poll released Wednesday by the Ontario Real Estate Association (OREA) finds that one-quarter of Gen Y residents, those born between 1981 and 1995 say they are likely to purchase property in the next two years, an eight-point jump from a year ago.
About 18 per cent of Gen Xers, those born between 1965 and 1980, said the same thing, a six-point bump from last year.
In June, the average price of a GTA home hit $747,000, a 17 per cent year over year leap, according to the Toronto Real Estate Board. In Hamilton, the average was $441,358, up 19.9 per cent over June 2015, according to figures released by the Realtors Association of Hamilton-Burlington.
Experts say those price increases fuelled by low interest rates, are spurring the home hunt rather than deterring it.
The survey showed “desire to own a home of my own” was a key reason for Gen Ys, cited by nearly 40 per cent of respondents, said Ray Ferris, president of OREA. For Gen Xers, the biggest driver was “long-term investment value.”
Slightly more than half of Gen Y respondents said they are likely to buy a detached house. That’s followed by more than one-quarter aiming for a “condo/apartment,” fewer than 20 per cent with their sights set on a semi-detached house, and a small minority gunning for a row-house or townhouse.
Gen Xers crave detached domiciles in even higher numbers. Nearly two-thirds say they plan to buy one. Semi-detached houses came in second at one-quarter, followed by condos and row houses.
Tarik Gidamy, a founding director of the online brokerage TheRedPin, which caters largely to younger buyers, says “the panic is starting to set in, with mortgage rates at all-time lows.
“It’s the mentality of, ‘Either I buy now or I’m going to miss my chance in Toronto or even the outskirts like Barrie, Hamilton,” Gidamy said.
He noted the greater appeal of condos to younger buyers may be the staged payment for pre-construction purchases.
“Not many people, coming out of school or two or three years into a new job, have amassed $200,000 or $300,000 in equity for a house,” he said.
Property flipping may also be on the minds of more than a few young home prospectors. The OREA survey reveals one in four Gen Y homeowners say they are likely to sell their place by mid-2018 to take advantage of the scorching Toronto-area market.
Only about one in 10 baby boomers say they plan to sell in that time.
The Ontario Real Estate Association represents roughly 64,000 brokers and salespeople from 40 real estate boards across the province.
The online Ipsos survey of 1,006 residents was conducted between May 31 and June 2. The results are considered accurate within 3.5 per cent 19 times out of 20.