The Most Millennial-Friendly Housing Markets In Canada

Written by Wayne Karl

Millennials, please adjust your homebuying aspirations. Your targets are a little off, so we've assembled Canada's most millennial friendly housing markets to help you.

Many of you -- those 18 to 34, the generally accepted age range for millennials -- seem to be aware of what's going on in Canadian real estate. Others, though...

According to the 2016 Bank of Montreal Millennial Home Buyer Report, 76 per cent of Canadian millennials who currently rent, expect to buy a home within the next five years. But affordability is cited as a major concern.

AFFORDABILITY CHALLENGES

Our first clue comes with what they expect to pay -- an average of $350,000 on their first home (but more on this later). Two thirds anticipate they will need help -- with $35,000 of that amount coming from family. The average expected down payment is 15 per cent, or about $53,000.

As a general guideline, buyers can assume the mortgage you can qualify for in today's market is about five times your income. "So, if you're looking to qualify for a $400,000 mortgage, the basic income requirement would be $80,000," says James Laird, president of CanWise Financial, in-house mortgage brokerage for mortgage comparison website RateHub.

The issue of millennials needing help to buy their first home also surfaced in two other recent reports. RBC Economics' latest Home Ownership Poll indicates 24 per cent of millennial respondents say they are more likely to consider purchasing a home with a family member. Another new poll, from ReMax Canada, says 37 per cent of millennials expect help with their down payment from a family member or friend.

EXPECTED PURCHASE PRICES VS ACTUAL PRICES

The problem with millennials' homebuying target purchase prices from the BMO survey comes when you compare them to actual prices. Their national average target price of $350,000, for example, is well below the Canadian average home price of $512,621, as of the first quarter of this year, according to the latest Royal LePage House Price Survey. That $350,000 expected purchase price, in fact, barely exceeds the national average price for the most affordable housing type -- condos -- which is $344,491.

But rest assured, prospective millennial homebuyers. There is hope.

MILLENNIAL FRIENDLY HOUSING MARKETS

We've assembled the most millennial friendly markets across the country -- what housing types you can buy in what markets, at less than the expected average price from the BMO survey.

In the following tables, we've laid out, province by province, what millennials expect to pay for their first home and their expected average down payment, based on the BMO survey. We've also projected the monthly mortgage payment, based on a five-year fixed rate at 2.59 mortgage on a 25-year amortization.

We then list the available housing types in major markets in each province that are priced at less than the expected average price -- based on actual average home prices as of the first quarter of 2016, from Royal LePage.

As you can see, in many markets, millennials may have to adjust their desired housing types and purchase prices, given what's available in certain areas.

Still, there are some very millennial friendly housing markets.

ATLANTIC CANADA home price expectations, BMO report

Average expected home price: $253,990

Average down payment: 13.39 per cent ($34,009)

Monthly payment: $995.41

Reality check: Limited condo supply in Atlantic Canada, and nothing in any housing type available the expected price point in St. John's, Nfld.

QUEBEC home price expectations, BMO report

Average expected home price $234,735

Average down payment: 12.82 per cent ($30,093)

Monthly payment: $927.54

Reality check: For those hoping to buy in Montreal, you might want to budget a little higher, since all housing types in Montreal Centre, East and West are above the average expected home price.

ONTARIO home price expectations, BMO report

Average expected home price $415,110

Average down payment: 15.97 per cent ($66,293)

Monthly payment: $1,579.09

Reality check: Ontario millennials -- get used to the idea of a condo being your first home.

PRAIRIES home price expectations, BMO report

Average expected home price: $264,388

Average down payment: 20.56 per cent ($54,358)

Monthly payment: $950.17

Reality check: Condos in Regina are just slightly higher than the average expected home price, at $275,138.

ALBERTA home price expectations, BMO report

Average expected home price: $386,480

Average down payment: 15.2 per cent ($58,744)

Monthly payment: $1,502.17

Reality check: Buyers in Calgary and Edmonton, investigate home prices in your city, as there may be deals to be had given the recent downturn.

BRITISH COLUMBIA home price expectations, BMO report

Average expected home price: $478,113

Average down payment: 15.85 per cent ($75,780)

Monthly payment: $1,818.89

Reality check: Sorry, Vancouver millennials. There's nothing in your average expected home price available in the city. And in West Van? LOL.

Sources: Bank of Montreal Millennial Home Buyer Report, April 2016; monthly payments calculated using 25-year amortization, five-year fixed rate at 2.59, via BMO mortgage calculator; Royal LePage House Price Survey, Q1 2016

Post originally published on YPNextHome.ca