As North Americans delay (or even skip) marriage and a growing number of Canadians choose to live alone, single-person households are now the fastest-growing demographic in Canada, reports Realty Times:
While one-person households accounted for only six per cent of households in 1941 and 13 per cent of households by 1971, the 2011 census shows they now represent 28 per cent of households … The homeownership rate for one-person households is also on the rise. Between 1996 and 2006, it increased from 40 per cent to 48 per cent. During the same period, the overall homeownership rate went up by only five percentage points, to 68 per cent.
Interestingly, single women are leading this trend. A few decades ago, mortgage lenders would have required a female borrower to have a male guarantor, but now single women make up a quarter of the homebuyers in Canada, according to Canada AM, while single men make up 10 per cent of Canadian homebuyers.
With women moving up the corporate ladder and pursuing advanced degrees, lenders have mostly shed their misogynistic policies (some may have reservations about lending to expectant mothers but that’s another story). However, single borrowers of both genders need to be aware of how lenders view their credit score. With one income instead of two, it’s especially important that single homebuyers keep their debt-to-income ratio at a reasonable level and work to clear up any credit issues. Single, self-employed borrowers may feel extra scrutiny because there isn’t a second income from a partner to reassure the lender.
Single homebuyers also need to be realistic about how much home they can afford. Just because a mortgage lender offers you up to $500,000 for a home doesn’t mean you should max out your borrowing ability, because you’ll also need funds for maintenance, closing costs, insurance and property taxes. Should you lose your job or decide to switch careers or take time off to return to school, you don’t want your monthly budget to be maxed out. Dual-income homebuyers should also be realistic about their budgets, but at least if one person gets laid off or needs to take time away from work, there’s another income to cover the mortgage and other housing expenses.
In expensive markets like Vancouver, it can be tough for single home-buyers to qualify for a mortgage and save up enough money for a down payment. This, combined with the growing demand for single-person housing, may explain why micro units are becoming increasingly popular across Canada. With these space-efficient units, single-person households who don’t require a lot of square footage can reap the benefits of homeownership without a huge yard to maintain or extra space to clean. One potential downside, though, is that many lenders require at least 500 square feet so you may have fewer options for financing a smaller unit.
