Thirty-six is the new 30 for first-time home buyers in Canada, according to a recent poll by BMO -- meaning that the average age of current home buyers is 36, while the majority of current home owners bought their place before they were 30.
Considering that millennials are typically 25 to 34 years old, many are left asking the question: are millennials buying homes?
Most Canadians assume that the answer to this is no, but in reality millennials are very active in the Canadian real estate market, and will continue to be.
According to a survey by Pollara for Bank of Montreal, about half of the population of millennials in Canada already own a home.
This may be somewhat surprising considering that the national average home price is over $500,000, according to the CMHC website, which isn't cheap.
The Pollara poll also indicated that three out of four millennials who have not yet purchased a home plan to do so within the next five years.
So, if you are among these ambitious millennials who plan to navigate the overwhelming and increasingly hot housing market, here are a few tips to help get you started.
Tip one: If you want it and can afford it, just buy it -- even if it's not in a prime location.
The harsh reality is that millennials aren't making as much money as they'd like to, which is rapidly steering them away from hot markets like downtown Toronto and Vancouver.
However, all is not lost.
One trend that has been gaining popularity is investing in a home with family members or friends. This is a great way to earn equity without the stress of saving up on your own for a hefty down payment or carrying a mortgage on your lonesome. This has been increasingly popular as millennials opt to get married later and invest more time and money in preparing for their career.
Another popular trend -- and a great idea -- for millennials when they're finally able to afford a home is to move to big-city outskirts for reduced housing rates. This trend has been around for some time now as prices in major cities continue to skyrocket and people choose to move further and further away from the downtown core. This may not be as convenient as renting downtown, but you are building equity in a home which will be much more beneficial long term.
Speaking of long term --
Tip two: Think long term.
Millennials are the generation of technology, and they're used to having all of the information they need at their fingertips. This is very different to how real estate deals were handled in the past. Millennials tend to do more research and educate themselves on what they are looking for, which is great -- but it's important to try to avoid creating the "perfect house" in your mind based on your research, because you most likely will not find it.
Millennials also have a very different value system from past generations of first time home buyers. They often consider themselves to be terminally unique. They want a home that will reflect and emulate their individual personality and lifestyle. This is a great attribute to have at any age, but if you are a first-time home buyer, you may have to settle for now in order to work towards your long-term dream home.
This may mean looking at smaller places that may not have the modern feel or the large backyard that you had in mind. Prioritize what is important -- and necessary -- and worry about all of the bells and whistles that you'd like to add later.
You may be more inclined to continue saving and looking for that perfectly unique home, but if you are paying rent in the process it makes more sense to invest that money in a home, built up your equity and move later.
Prepare, Prepare, Prepare
The above two tips assume that you have money sitting in the bank. So, what if you don't?
The fact of the matter is that it is increasingly difficult for millennials to even dip their toes into the careers of their dreams without extensive amounts of education under their belts (which, of course, generates more debt, further reducing the amount of money they have to spend).
You need experience to get work, and need to work to gain experience, so many millennials marching from one low-paying job to another, not earning nearly enough to pay off their debt for prolonged periods of time.
In many cases, this vicious cycle leads to millennials going back to school in their late twenties to hopefully gain additional credentials for better career opportunities.
Due to this and many other factors, many millennials are opting to stay with parents or live with roommates much longer than in the past. So if you are one of these millennials, you are not alone -- in fact, this category is overcrowded if anything.
For those that are far from the dream of owning a home -- that's OK. Start now!
You may have a million bills to pay, but your future home should still be on your priority list. Try to put aside a bit of money each month towards it. You can do this automatically through your bank, RRSPs (since you're a first-time home buyer) or an alternate way to put money aside that works for you -- just make it a priority!
Also, while you save, make your credit score a priority, too. Poor credit can take a very long time to repair so even if your dream of owning a home seems years away, improve your credit score early on.
Two-thirds of young adults said they made a major credit mistake before age 30, a Credit Karma survey found. This is a clear indicator that there needs to be more education about credit and mortgages -- so inform yourself and/or ask a professional for help.
Missing even one payment can severely alter your credit score and late payments can stay on your reports for as long as 10 years. Setting up automatic payments is the best way to ensure you never miss a due date.
Frankly, the same truth still rings true for millennials as any other generation -- if you have the money, buy while you can.
It may seem smart to wait, but you're much better off to get into the market however you can as house prices in Canada have consistently increased over the last few years. According to the Canada Mortgage and Housing Corporation the average house price across the country has increased by 5.4 per cent each year over a 30-year moving average -- so buy while you can!
If you are not yet in a position to buy, the most important thing to remember is to keep your future home and maintaining your credit score on your list of priorities . Treat your future home as a monthly bill, now.
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