What Millennials Really Think About Homeownership
Millennials have really captured the attention of those in the housing and mortgage loan industry. Everyone is trying to get inside the head of millennials to figure out when, why and how they plan to enter the housing market. It makes sense too, after all, millennials are at the age when people traditionally look to establish roots and make a house a home.
Currently, only about 40 per cent of millennials own a home and of those who don’t, an estimated 70 to 80 per cent hope to jump into the market soon. But what else is on the minds of millennials about homeownership, and what challenges can they expect to face?
HSBC Finds Millennials Optimistic Yet Unprepared for Homeownership
Millennials are an optimistic bunch, according to HSBC’s global study Beyond the Bricks. The study found a whopping 82 per cent expect to become homeowners for the first time within the next five years. However, of this group, 70 per cent say they haven’t saved for a down payment, or even prepared a budget for buying a home.
As a result, 37% had to ask their parents for financial help in the initial homebuying process. And 42% of millennial homeowners overspent, which for many meant going back to their parents for more help.
CIBC Finds Majority of Millennial Homeowners Plan to Sell
An April 2017 CIBC poll found that over a third (39 per cent) of Canadian millennials have become homeowners, yet of this group, 81 per cent plan to sell their home. Why? It appears to come down to financial struggles.
Sixty-three per cent of CIBC poll respondents said they were on their way to becoming “cash poor” due to mortgage and housing costs, which could include condo fees, property taxes, utilities, and home insurance. At the same time, 57 per cent said that rising mortgage rates would make it tough to meet their mortgage payments. And the biggest surprise of the CIBC survey? A solid 36 per cent of millennial homeowners said that renting is a better option than owning a home.
Royal LePage Peak Millennial Survey Reinforces Affordability Issues
In August 2017, the Canada-wide Royal LePage Peak Millennial Survey found that almost two thirds (64 per cent) of millennials say that the price of a home in their area is simply unaffordable.
As a result, many are looking elsewhere. More than half (52 per cent) are considering the purchase of a home in the suburbs, while 61 per cent would look to move and buy a home in or another more affordable city or suburb. For example, peak millennials in British Columbia could consider Kelowna, Langley, or Victoria where houses cost about half of what they do in Vancouver. And in Ontario, cities like London, Ottawa, and Hamilton offer affordable alternatives for aspiring millennial homeowners than expensive Toronto.
There’s no denying that millennials face challenges when it comes to homeownership. Yet as these studies and statistics show, careful planning, research, and a flexible attitude make buying and owning a home achievable.