What Millennials Think of Homeownership?
Buying property may seem like an out-of-reach goal for most millennials, defined as those born between the 1980’s and the 1990’s, especially when purchasing property in the Toronto area, one of Canada’s most expensive cities. In addition, there are often preconceived notions that millennials are the generation that will likely invest in short-term investments before making the leap into real estate. With recent advancements in automated investment technologically such as Wealthsimple and other Smart Investing apps, there are new avenues for millennials to invest their hard-earned coin.
However, most millennials are still interested in owning their own home and are striving to find ways to achieve their goals. Homeownership is without a doubt one of the largest financial commitments an individual will take on in their lifetime and can be a daunting task. Millennials often have additional challenges when it comes to reaching their goals. Generally, they marry at an older age compared to the generations before them thus faced with purchasing property as an individual rather than a traditional couple. According to the 2016 Census, more Canadians are choosing to live alone than ever before. For the first time in Canada’s history, the number of one-person households have exceeded all other types of living categories accounting for nearly 30% of households in 2016 according to Gloria Galloway, writer with the Globe and Mail.
For most millennials, however, homeownership is often delayed due to limited savings, high amounts of student debt, and a variety of other lifestyle factors. Millennials are often trapped paying off student loans throughout their twenties, making it difficult to save cash required for a down payment. Generally speaking, millennials are gravitating to cities for education and employment purposes; where both lease rates and property values are significantly higher due to demand.
In many cases, millennials are paying over half of their income on suitable housing, resulting in limited options for investing. Understanding affordability in relation to suitable housing will be a continued challenge for individuals trying to enter into the housing market. Understanding millennials interests when purchasing property will be critical when tackling the issue of affordability and buyer behaviour.
Micro-apartment living in major cities where dwellings are between 400 and 600 square feet continue to be in high demand due to millennials capabilities and limitations with purchasing property. With property prices in major cities in Canada ranging from $1,000 to $1,200 per square foot, a 500 square foot apartment can range from $500,000 to $600,000; a substantial sum of money for individuals to commit to when purchasing their first property.
When promoting homeownership towards millennials, the public and private sectors will need to continue emphasizing affordability, supplying a suitable/attractive product for millennials that meet current trends, and lastly developing property in areas with proper infrastructure and services such as in areas near or within the central business district. Purchasing property is still on the radar for millennials, even those who aren’t quite ready to commit to homeownership now still hope to be a proud homeowner one day.