Did you know that 39% of millennials are expected to buy real estate over the next two years in Ontario according to RBC?They make up the fastest-growing segment of buyers today!
With the student debt that a lot of millennials are carrying as compared to previous generations, the lack of supply and stringent lending policies, it seems that the real estate odds are stacked against millennials.
That being said, is homeownership really out of the question for millennials? Not necessarily, but it’s not going to be easy. The best approach, a prudent, well thought out and well-researched approach.
Here are the top three items that I think millennials should consider in order to approach the market -
- Live at home with mom and dad for a little while longer. With rents rising to unseen levels, this approach is a prudent way to keep expenses down and save toward a down payment.
- Meet with the bank or mortgage broker prior to considering a purchase and get preapproved. Planning ahead is always the best, maybe it’s the Girl Guide in me and remembering the ‘Be prepared’ motto. The bank or the mortgage broker help will walk you through your finances, giving you options such as perhaps borrowing from mom and dad or looking at your expenses monthly. I saw a great post yesterday, comparing the cost of ‘getting lit’ one Saturday night ($205) to not going out the 104 Fridays and Saturday’s throughout the year, saving approx $21,000+. Needing a 5% down payment on a $450,000 property….$22,500. What I am getting at, if you are serious about the market, you’ll get serious about your expenses.
- Shift your expectations. I was often told by my dad that I had champagne taste on a beer budget. Be realistic about what you can afford and what you want to afford. At the end of the day, regardless of what you are approved for with respect to a mortgage, you are the one paying your mortgage. Set out what you are comfortable spending and then consider what geographic area that budget will allow you to buy-in.
Once you are preapproved and are comfortable with moving forward with a purchase, turn off HGTV (tongue in cheek here as even I am addicted to HGTV) and get ready to start looking for your first real estate purchase! Always happy to have a conversation over coffee or perhaps a glass of wine!