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BMO : Few Millennials Are Ready to Buy, But The Housing Market Does Not Wait


Under Real Estate

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April 28th, 2016

Everyone is interested in what the millennial generation is thinking because millennials make up the largest demographic. It’s estimated that there are approximately 80 million of this generation, aged (loosely) 19–35, in the US. That means roughly 8 million in Canada. They are always in the news, and always being surveyed for their views on one thing and another because of their economic and political clout. The Washington Post reports today, for example, that a majority of millennials (51%) no longer believe in capitalism. This was revealed by a Harvard University survey, and though the result is surprising, it is also difficult to know what to make of it.

Another new poll, this one carried out for the Bank of Montreal, asked millennials how they feel about home ownership. This is interesting to the bank because the bank sells mortgages, and millennials represent a huge market for them. Previous polls have shown that millennials still consider owning a home to be a good thing, which pleases the banks. That finding is confirmed in the latest survey, which was carried out by Pollara in March, with a sample of 2,079 respondents. Most of the respondents (89%) agree that there is value in home ownership. But almost as many (70%) say they are in no hurry to buy. They would rather wait until they can get the home they really want.

Our young clientele are savvy and mindful of how their investments will grow, and this holds true when it comes to real estate. More than the intangibles, the return on a home purchase is important to millennials and they take a thoughtful approach to how their home will fare in the current housing market. These are all areas where a mortgage specialist can help guide them through.

Does that mean they are holding out for the home of their dreams? Not quite. It turns out that most millennials (at least in this survey) are not sentimental types but view buying a home as more of an investment decision than a personal milestone achievement. Getting the “right” home therefore means getting one whose value will rise, not fall, and one that has no hidden problems. They are “savvy and mindful of how their investments will grow,” according to BMO’s home financing man, Damon Knight, “and this holds true for real estate.”

The problem with this waiting strategy, Knight points out, is that home prices are going to keep on rising in a market like Toronto. It would already take, on average, $350,000 to enter the market in Canada, and $465,000 in Toronto. Those millennials who think they can wait until the “right” home comes along could find themselves perennially sidelined. “Prospective buyers should certainly not enter the market until it is personally right for them,” said Knight, “but as they sit on the sidelines, they need to be mindful that the market in not waiting for them.”

The BMO survey found that just 26% of millennials are very likely to buy within the next year. Among the many reasons given for not buying are lack of readiness to make such a big financial commitment at this time, a desire to do other things, a desire to pay off existing debt, and fear of becoming “house poor” with no disposable income left for other pursuits.

BMO : Few Millennials Are Ready to Buy, But The Housing Market Does Not Wait by Josephine Nolan | Condo.ca

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