Home Buying for Millennials – It’s Possible!

Many millennials in Vancouver feel as if they’ll never be able to afford a home, and consider either becoming lifelong renters or relocating as a result. Despite the skepticism young people feel about the viability of home ownership, it is still possible to buy a home here. In this article I’ll give a quick overview of the difficulties and potential solutions to owning a home as a young first-time buyer.

First, let’s define the age of a millenial. A “peak millennial” is an individual between the ages of 25 and 30. This demographic owns less property than their parents – for reference, only 50.2% of this group who lived outside their parents’ houses owned property themselves. This number has decreased compared to previous decades.

One of the challenges faced by millennials in Canada is the concentration of jobs in Vancouver and Toronto, yet the lack of housing stock. Moving somewhere with cheaper housing could make it more difficult to find jobs in many fields. Ultimately, staying in Vancouver is still a solid option due to the many amenities and renowned quality of life, even if housing is expensive compared to smaller urban areas in Canada.

Another challenge is that the new mortgage stress test makes qualifying for a mortgage more difficult than in the past. Applicants who are uninsured borrowers now must pass the stress test, which is the Bank of Canada’s five-year rate (currently at 4.99%). Although this might shrink the pool of millenial applicants, it also means the people who qualify for mortgages will likely be better able to handle the payments in the future, and might feel less pressure each month.

However, millennials are still able to become homeowners if they are determined. A potential solution is to purchase a property with one or more close friends who have similar financial goals. This allows multiple individuals to become homeowners sooner than they would otherwise, with the potential for all parties to then live in the property, or for it to be used as a source of rental income.

Young would-be homeowners should also consider asking their parents for assistance as co-signers or to contribute to a down payment. Parents of millennials often have equity and are willing to help their children become homeowners, since they have recognized this as advantageous in their own lives. Obviously this is not an ideal solution for everyone, but it is a conversation worth exploring if something could be arranged.

If you’re a young buyer, or a young person in your family is considering making a purchase, I am available to discuss the recent increases in Vancouver property values, the effects of international speculation, and the benefits of ownership over a long timeline. Whether you want to buy now or are studying the market waiting for the right opportunity, let’s get in touch!

Picture Source: CBC