Millennial Home Buying? The Struggle is Real.
Young Canadians won’t miss out — just get creative.
How would you like to launch your adulthood in a time of record high housing prices and crippling student loan debt? Despite the obvious barriers facing them, recent studies suggest that 40% of Canadians 18-34 wish to buy a house in the next two years.
Home buying isn’t what it used to be. Especially in markets like Toronto and Vancouver, where locals are already shifting what it means to live together and share space. For the hopeful homeowner, simply saving up is often not enough. To appease the fear of missing out — home buyers are getting creative. How, you ask?
1. Buying together
Evidence suggests that more than ever, friends are pooling resources to buy a place together. No question, this cuts down on cost, but eventually one or more parties might need to move on, which can cause friction, and renewed financial strain.
2. Targeting fixer-uppers
Financeit Inc. provides financing for unsecured installment loans in Canada. Chief Executive Michael Garrity says the majority of his business is now in renovations, especially among young people:
“We’ve seen a 66% increase in the last two years of Millennials using our platform to get home improvement loans,” he says. “We’ve asked why. The oldest Millennials are now 34; they might have been in a house for five years (and want to renovate). [Also,] the housing market is getting overheated; millennials are looking for value and that’s a fixer-upper.”
3. Buying to rent
While the promise of renters can’t get you a bigger mortgage, in certainly can reduce the strain on month-to-month cash flow, making it possible to carry a house. According to Altus Group, 15% of homeowners under 35 in Toronto, Vancouver, Calgary and Montreal used an accommodation service to help rent out a portion of their living space, and millennials in that category did so 22% of the time.
4. The time is now?
No matter when the urge to buy hits, all prospective homeowners face the same questions: will the prices drop, and, will the rates go up? For millennials, the likelihood of prices dropping dramatically seems pretty low. Doug Porter, chief economist with Bank of Montreal, says “We’ve seen housing go in one direction for something like 15 years now.” As for rates, the federal government insists consumers to qualify based on a rate of 4.64%, regardless of the lower numbers the banks may be offering.
The position millennials find themselves in is not enviable; 56% say the headlines about housing markets make them anxious. However, buying solutions have also never been so inventive, and perhaps, home-ownership never so appreciated.