The truth is that Millennials are almost as eager to buy into the dream of home ownership as previous generations, despite widely-held myths about disinterest, staggering debt load and unwillingness to commit to either a career or ownership responsibilities.
The Plight of Canadian Millennials
The generation born between about 1980 and the turn of the century, it turns out, is not so unlike their parents after all. According to Nerd Wallet, the median age of homebuyers in the United States has held steady for the past 40 years, at between 30.6 and 31. Two-thirds of Millennials today have not yet reached that magic age of 31.
In Canada, parents of today's Millennials typically bought first homes at a younger age, around 25. Today, buying a first home at that age is unrealistic for most young people. Real estate prices have escalated without a corresponding increase in wages. According to one analyst, the ratio of home price to earnings was approximately four to one in 1976, when the Baby Boomer generation was buying. Today the ratio has risen to approximately 10:1, according to Paul Kershaw, a University of British Columbia professor. In Ontario, it is closer to 12:1 and in Vancouver, B.C., it reaches 14:1.
Although desire may be strong, the reality is that Rosemont home ownership is beyond the ability of many Millennials. Even if they have the cash to put down, carrying a mortgage on a single-family home may require the equivalent of eight months of full-time work, up to twice as much as in 1976. The alternatives are to continue renting, to buy condominiums or townhomes, or to search in less expensive areas.
High Prices and High Demand Are Realities
Rising home prices and falling wages are still problematic for younger buyers, even though the market is not as strong as it was a couple of years ago and some government action is in place to stem the tide of increasing costs.
Optimism still reigns, however. More than half of Millennials express a hope to buy within the next two years, according to reports. Mortgages are still available for as little as five percent down, and parents are often willing to help out. Young people note that it takes persistence because of high demand, but that home ownership is still possible. And that is good news not only for real estate, but for current renters as well, especially in light of rising rents.
The myth that Millennials are not interested in home ownership should be put to rest.