Our obsession with what millennials do and buy continues. A new survey by TD Bank finds as millennials approach their 40s many admit they’re willing to give up city life for the suburbs. Like any generation that came before them, settling down and having kids changes your priorities. Often fulfilling every family members needs and staying within your budget means moving away from the city and possibly taking on longer commutes to work.
Attitudes are shifting
This is what the survey found. 81 percent of Canadian Millennials aspire to own their own home, debunking older reports that have painted millennials as nomadic renters to the end.
64 percent are willing to consider going from the urban to suburban life in order to own a home that meets their existing needs or future goals. This discredits critics that say millennials are unwilling to sacrifice their lifestyle and only want to live downtown.
Speaking of sacrifice, millennials in the survey say they were willing to make a number of day-to-day ones. 58 percent are willing to give up eating out, 56 vowed to shop less and 50 percent said they would cut down on entertainment spending.
Long commute a deal breaker
The one area millennials are still unwilling to sacrifice, according to this survey, is their short commute. Only 27 percent of millennials say they’re willing to spend more time travelling to and from work in exchange for their dream home in the burbs.
Although they did not state in the survey, this could be an indication of the rising trend in work-life balance among younger workers. This is further evidenced by an increase in work from home jobs, more self-employed persons, satellite positions and generally a more flexible attitude of work hours from corporations.
The latest available Statistics Canada numbers reveal that in 2008 more than 1.7 million employed by an outside company worked from home at least once a week. That is up almost 23 percent from the 1.4 million that worked from home at least once a week in 2000.
Study after study shows long commutes are a real stressor that have a negative impact on our health and wellness. Like this recent one published in the journal Economics and Human biology that says long commutes can hurt your unborn baby, or this Harvard study that says the key to a stress free work day is a shorter commute.
Millennials have apparently figured out, perhaps from watching their parents endure long commutes, that long hours on a train or bus or in a car is not good for our health. If they move to the suburbs but know they only have to commute a few times a week, that longer commute may be much more bearable the few times they do have to go into the office.
Those surveyed did give specific reasons why they may choose the burbs. 78 percent found the burbs more affordable. 60 percent like how they could get a bigger home. 59 percent like the idea of living in neighbourhood with potentially more young families like theirs.
A home purchase is probably one of the biggest financial decisions you’ll ever make. For first time home buyers, that first house can also be a precursor of what they can afford in the future. That’s because how that first home appreciates in value will dictate where you will move next, if you so desire.
If you’re planning on making this your forever home, make sure you’re doing some forward planning to see what your needs may be, even decades from now.
When it comes to your personal finances, make sure you conduct your own stress test on the money you are borrowing. The bank will already have to qualify you on a rate two percentage points higher or the Bank of Canada posted rate to show you could pay your mortgage if rates were to rise.
But you can go a step further.
Could you pay your mortgage if rates were three to six percentage points higher? After making mortgage payments do you have enough money for unexpected costs like home maintenance or your car breaking down? If you’re making financial sacrifices, how are you going to feel about them six months down the road? When you have gone without that one pleasure for that long. If you are a restaurant regular, cutting it out completing might make you feel worse and unable to enjoy your new home.
Quick tips before you start buying.
Get preapproved so you know how much you can spend on your new home. Add in the cost of realtor fees, land transfer taxes and small renovations and upgrades like painting the home or installing new appliances. As a new homeowner start building an emergency fund. You can anticipate spending one to two percent of the total value of your home on upkeep. Prepare for that.
Whether you’re a millennials or a retiree. A new home purchase is one to consider carefully always make sure it makes personal finance sense to buy it.
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