Young adults are the most likely age group to buy a home in the next two years but more than half of those surveyed think the time isn't right yet, according to a poll released Thursday by Royal Bank of Canada.
RBC's annual home ownership poll found that 55 per cent of respondents aged 18 to 34 said it makes sense to delay a home purchase until next year. That's 10 percentage points more than the national average for all age groups.
Meanwhile, about half of young people who have already delved into home ownership responded that their mortgage is eating up too much of their income - suggesting their peers may have good reason to wait.
The year's survey, done for RBC by Ipsos Reid in mid-January, came at a cooling off period in the Canadian housing market following a spate of frenzied buying in the early months of last year.
Many first-time buyers rushed into the market in the first half of 2010 while the Bank of Canada's key interest rate - which influences commercial lending rates - were set at emergency lows of 0.25 per cent because of the recession.
However, those changes affect a minority of mortgage holders who opt for variable rate mortgages linked to the commercial banks' prime rates.
Some buyers also wanted to enter the market before the new harmonized sales tax was implemented last July in Ontario and British Columbia, which have two of the country's largest real-estate markets.
Although the HST only applied to some services associated with a home purchase, such as lawyers fees, some buyers thought it could push closing costs up a lot more.
First-time homebuyers are also most affected by government moves to change mortgage rules that made it more difficult to qualify for a mortgage. Stricter lending rules brought in the spring of 2010 require all homebuyers to qualify for a standard five-year, fixed-rate mortgage.
More recently, new changes enacted last month shortened the maximum amortization period for a mortgage to 30 years from 35, increasing the size of monthly mortgage payments.
Demand for homes began to wane last spring as rising home prices, short-term mortgage rates and stricter mortgage rules combined with the exhaustion of pent-up demand from the recession.
That has put buyers and sellers on a more even footing when they negotiate.
"In a more balanced housing market, it makes sense that younger and first time homebuyers are waiting to assess all of their options and do their research before buying a home," said Bernice Dunsby, RBC's director of client acquisition for home equity.
"It's also important to get expert advice on what you can afford and leave yourself with a little extra wiggle room in your budget so you don't become house poor, as home maintenance and lifestyle costs can add up."
While 43 per cent of younger Canadians (aged 18-34) told Ipsos Reid they are paying off their mortgage faster than they expected, two-thirds (66 per cent) said it is larger than they would like it to be.
Rising real-estate prices, along with having a large enough down payment, were the biggest concerns among young people surveyed.
Still, 43 per cent of the young adults responding to the survey said they were looking to buy in the next two years, suggesting the housing market will continue to be healthy going forward.
That's higher than the national average of 29 per cent for all age groups.
In comparison, only 29 per cent of Canadians aged 35 to 54 said they want to buy within two years and only 17 per cent of respondents over 55 were looking.
The survey also revealed that young people have different ideas about how to seek out advice on home ownership than those belonging to older generations.
Most young people said they were more inclined to use websites, family or friends for advice while more than 70 per cent of Canadians over 45 said they would rely on a real estate agent.
The survey's findings are based on responses from an online panel of 2,103 Canadians, conducted Jan. 12 to 17. A survey of this size has a two percentage point margin of error 19 times out of 20.
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