Rising housing prices are prolonging the length of time that young adults are staying at home — to the point at which almost one in three adults between ages 21 and 34 still lives under the family roof.

A recent survey by Decima Research Inc. for Bank of Montreal of more than 1,200 potential homebuyers within that age group found that 29% are living with their parents while saving for a down payment on a home. In Canada’s biggest cities, such as Toronto and Vancouver, where average home prices are highest, the number of young adults at home is even higher, suggesting that living at home is seen as one of the best ways to accumulate savings for a down payment in an expensive housing market.

“The young people I’ve talked to have a lot of enthusiasm for buying houses these days, and they’re primarily concerned with putting together the down payment,” says Tony De Thomasis, president of De Thomas Financial Corp. in Richmond Hill, Ont. “After that, they’re expecting to pay off their mortgages as they move up to better jobs and their salaries increase.”

The Decima/BMO survey found the average reported savings rate of the young adults was 12.5% of pre-tax income across Canada, indicating that the vast majority of their earnings is spent on other needs and desires. Those living at home with their parents are saving 16.6% of their incomes on average, while those who have left the nest and are currently renting are saving 11%.

On average, the young Canadians surveyed hope to be able to amass a down payment representing 15.4% of the cost of a home.

De Thomasis suggests that young people living at home may want to save 40% of their income — the percentage that owning a house will typically eat up.

“If they find it difficult or impossible to save 40%, I would suggest they are not ready for home ownership,” De Thomasis says.

The survey found a large gap between expectation and reality. Although most potential homebuyers aged 21 to 34 expressed a desire to purchase a home within the next few years, their rate of savings is not putting them on track to get there. The difference would imply some could still be living at home and saving insufficient amounts as they approach 40.

Says De Thomasis: “The trend toward living at home longer may not be creating responsible adults.” IE