Home Alone

Article excerpt

Many young singles buy a house just for themselves

Census data from last month reveal a trend that should come as little surprise to many baby boomers:

Canada's 20-something demographic is failing to launch.

You don't have to tell that to the parents of the thousands of late-20-something Canadians -- about one in four of them -- still living at home.

It's not that these young adults are listless layabouts. Instead, the more likely scenario these days is they're living at home so they can save for their future.

And many aren't waiting for the love of their life to come along before taking the plunge into home ownership. A good number are going it on their own, says Farhaneh Haque, director of mortgage advice at TD Canada Trust in Toronto.

"You don't have to look very hard," she says. "There are a lot of single young people in the market."

According to TD's own research, about 55 per cent of men and 30 per cent of women buy their first home on their own.

Census numbers seem to confirm this trend. For the first time ever, Canada has more single households than households with couples who have children.

Although record-low borrowing rates have made it easier to finance buying a home, going it alone is by no means an easy path to home ownership.

"You really need to be good with savings, because when you're a single buyer, as opposed to a couple, the responsibility of all the mortgage debt falls on just you," Haque says.

But it's more than just being able to pay the bills. Just getting your foot in the financing door is tough. Real estate prices keep rising while incomes remain relatively stagnant.

The average cost of a Winnipeg home was about $96,000 10 years ago. Today, it's $245,000. Even condos -- often the first choice for the single buyer -- are getting pricey. They run about $186,000.

In contrast, incomes have increased only modestly. In 2002, the average income for singles in Winnipeg was about $26,000 a year. In 2010, the latest data available, it was about $28,000.

No hard data exist to explain why a quarter of Canadians in their late 20s still live with their parents -- a number that's more than doubled since 1981.

But based on what Winnipeg mortgage broker Rosa Bovino hears from her young, single, first-time homebuyers, the reason is pretty clear: the increased cost.

"I think people are still living in Mom and Dad's basements so they can save more money for a down payment."

Yet it's not just the high price of real estate. Changes to Canada Mortgage and Housing Corp. (CMHC) rules for lending haven't made it easy on first-time buyers, single or attached, says Bovino, a broker with Invis. Over the last four years, the federal finance minister has tightened lending rules to cool off an overheated real estate market, fearing a U.S.-style subprime housing crisis developing in Canada.

The most recent change kicked in July 9, reducing the maximum amortization period to 25 years from 30 years.

It's the latest in a series of amortization-rate decreases from the all-time high -- a 40-year amortization mortgage, which the government announced in 2006 specifically to facilitate buying a home for first-time buyers in markets where prices have soared.

Also long gone is the ability to get CMHC backing for a mortgage with no down payment. Since the summer of 2008, homebuyers need a minimum of five per cent down to qualify.

Despite these hurdles, many single Canadians are still qualifying for mortgages because they've been able to get their financial house in order, Haque says.

Her advice to would-be first-time buyers is to get used to pinching pennies.

"No. 1 is you want to save aggressively for as big a down payment as possible to make your monthly mortgage payment more affordable," she says.

Even with the minimum five per cent down payment in hand, however, more cash is required to cover a long list of additional expenses in completing a real estate deal. …