Hot housing market affecting Canadians' retirement plans, survey says

Current homeowners feel house-poor due to exorbitant real estate expenditures

Hot housing market affecting Canadians' retirement plans, survey says

Recent research from Canada Life indicates that people's ambitions to buy homes are shifting because of the present market situation. It's a development that might affect retirement planning in the long run.

According to the study, excessive real estate costs are making current homeowners feel house-poor and deterring many renters from entering the housing market. Nearly half of those who rent (45%) will either continue renting indefinitely or are unsure when they will buy.

“Canadians are at an investments crossroads,” says Paul Orlander, Executive Vice-President, Individual Customer, Canada Life. “While buying a home can help you build equity that could be valuable to one's long-term financial plans, renting may provide more peace of mind around affordability, flexibility and lower housing costs which could leave more for savings and investments each month.”

Important findings from the study include:

  • Almost three-quarters (73%) say it's a bad time to purchase a home, and renters cite high real estate prices, a lack of funds for a down payment, and a lack of income to qualify for a mortgage as their top three reasons for staying out of the market;
  • 64% of respondents believe new homeowners won't be able to break into the market without financial assistance from others, such as a family member, despite the fact that 79% feel that home ownership is a smart investment;
  • Compared to Canadians aged 30-49, those aged 25-29 are twice as likely to never buy a home or stay in a rental for the rest of their lives;
  • Today, 24% of homeowners report feeling "house poor."

Nearly half of those who have contributed money toward a down payment say their savings (43%) or ability to invest (48%) have dropped, and around one-third will need to change their retirement plans (24%) or put off house improvements (32%) as a result.

“Home ownership is one of the most important investments in one’s lifetime and with the right advice and long-term planning, a plan to build home equity should be one that is within reach for first-time homebuyers in Canada,” said Hugh Moncrieff, Executive Vice-President, Advisory Network and Industry Affairs, Canada Life.