Millennials are becoming of the age when they will naturally become first-time home buyers, and as of late, there’s been a large focus on how they will impact the real estate market. But with Canadian house prices continuing to rise at an increasingly rapid rate, is owning a home truly a priority anymore?
According to a new report from BMO Bank of Montreal, 70 per cent of millennials say they would delay purchasing a home if it meant that they wouldn’t have to settle, and they could really get what they want in a home. Despite the fact that 60 per cent of those surveyed are tired of paying rent, they’re in no rush to pay the national average price for a home, which currently sits at $350,000. However, if you live in Toronto or Vancouver, that number jumps to $465,000 and $525,000 respectively.
The attitude towards buying a home
Many millennials are finding themselves in a predicament; They are entering a job market that’s less than ideal while still being pressured by their parents to buy a home. Eighty-nine per cent of those surveyed see the value in being a homeowner, but rather wait until they personally feel comfortable with buying. Sixty-six per cent think that buying a home is an investment decision rather than an important milestone. Simply put, some millennials may just have other concerns and priorities.
Financial priorities of millennials
- 44% don’t feel comfortable with making such a large purchase at this point in their career
- 38% are concerned about not having disposable income if they buy a home
- 42% prioritize travelling, going back to school or starting a business
- 31% prioritize paying off debt
- 31% are unsure of where exactly they’d like to settle
Only 26 per cent of millennials are likely to buy a home within the next year. So while these concerns are reasonable, it’s also important to note that there is potential risk in delaying homeownership. Though there is no predicting the future of the real estate market, rising property values could quickly outpace your savings rate.
Related read: Where to Save Your Home Down Payment
Don’t buckle to the pressure
With home prices continuing to rise and bidding wars constantly making headlines, there’s certainly some pressure to rush out and buy. According to a recent survey from TD, one in five recent homeowners in Toronto and Vancouver say that the “fear of missing out” was their top consideration when they decided to buy.
Buying a home will most likely be the largest purchase you’ll ever make, so there’s no reason to rush out and buy due to irrational fears. Like buying, renting also has its pros and cons
Related Read: The First Time Home Buyer’s Guide
If you do plan on buying a home soon or even in the long-term, start saving now for a down payment. Ideally, you want to save at least 20 per cent so you can avoid CMHC insurance, and be sure to use a mortgage broker to get pre-approved. It’s also important to stay informed about how much you can realistically afford. If you’re unsure about your current numbers, refer to Rob Carrick’s Real Life Ratio calculator to get a sense of affordability.