Earlier this year, Royal LePage conducted a survey of Millennials aged 25 to 30 across Canada and found the desire among young Canadians to own a home remains very strong. The survey found that 87 per cent of Millennials believe homeownership is a good investment.
However, when breaking down the Royal LePage survey results further, they show that 72 per cent of Millennials in Ontario think house prices are not affordable. Given that value constraint, about two-thirds of survey respondents are willing to move to other cities or suburbs where property is more affordable.
In early November, results of a survey conducted of Millennials in the Greater Toronto and Hamilton Area by the Toronto Board of Trade were released. Despite the skyrocketing house prices this year, 86 per cent of Millennials want to own their home, with 30 per cent of those respondents planning to accomplish that goal over the next two years. The results of the survey also showed that 67 per cent of Millennials plan to spend less than $750,000 on their next home purchase. For comparison purposes, a new single-family house in the Greater Toronto Area (GTA) is being offered at about $1.2 million, according to Altus Group data, but a new GTA condo is available for approximately $640,000. A new condominium outside the GTA, but inside the Greater Golden Horseshoe is priced at slightly more than $450,000.
Perhaps you think all of those prices are too high. Well, you’re not alone. The Toronto Board of Trade survey showed that the biggest reason Millennials are still renting is they can’t afford a down payment, while a significant portion of respondents indicated that they wouldn’t be able to afford the monthly carrying costs if they owned. To combat those problems, about one-third of Millennials plan to get financial help with their down payment, with the survey indicating that the majority of those seeking assistance are looking at buying a condominium.
For the Millennials who worry about their down payment and monthly carrying costs, they should consider buying a new condominium. Although most new condominium developers require a 15 per cent down payment, it is often payable over one year to 450 days, not all at once like a resale unit. Most new projects have expected completion dates in three or four years, so a purchaser could borrow the down payment and slowly pay if off until occupancy commences in 2020 or 2021. This strategy allows a buyer to wait a couple years, at which time there is a good possibility that their income is higher, and allow them a few years to convince their parents or relatives to help them out with their monthly payments.
Millennials see the value in owning, but perhaps a more patient strategy of buying a new condominium is a prudent approach. The home is under warranty, everything is brand new and never used, and a buyer gets to pick all their colours and finishes. It might not be big, you might not get it right away, but it will look the way you want it, and a new home warranty gives you peace of mind.
To all the Millennials out there, good luck in your home search.