Canada’s housing market remains strong despite the economic downturn, and more millennials are buying with Calgary’s ever-growing communities. Though the average housing prices are increasing, it’s the selection of homes and the buying incentives from builders that keeps the buying market strong.
The average price of a single-family home in Canada, in 1996, was $150,899, which seems pretty affordable. Now – 20 years later, in 2016, the average price is up by 66 per cent at $442,264, per the Canadian Real Estate Association (CREA).
The term, “millennials” colours the idea that more and more 20- to 30-year-olds are living at home for as long as they can when, in fact, the latest study on consumer housing trends from Zillow finds that about half of home buyers are under the age of 36. The market is also comprised heavily of first-time buyers: 47 per cent of those buying and 63 per cent of those selling a home are doing so for the first time.
Unsurprisingly, in a market where home prices are reaching all-time highs, homeownership remains a challenge for many. More than half of home buyers didn’t get the first house on which they made an offer. And even though 56 per cent of buyers saved over time for a down payment, 32 per cent found that their savings were not sufficient to buy a home and had to use other sources, per CREA.
Steve Thirlwall, 25, from Calgary, still lives in his parent’s basement but has decided to skip the renting phase all together, instead opting to buy his first home.
“The search for a REALTOR® and getting approved was quite easy, though finding the right home in the right community has been difficult.”
Thirlwall says that because most “regular” single-family homes run for “half a million or more”, finding a house that isn’t the size of an apartment for a reasonable price has been the challenge.
“From the beginning of our search we were adamant about saving the 20% down payment to avoid the CMHC fee. The hardest part was the two years of saving and waiting before we felt we could afford a house.”
Though the bright side of these challenges is the opportunity to afford in the some of the communities that may not have been an option before.
On average, first-time buyers spend $263,310.34 on their home—18% less than repeat home buyers, who spend about $309,389.65. Millennials are also buying homes that are only slightly smaller, at 1,800 square feet, than those purchased by Gen-Xers and Baby Boomers, whose homes are on average 2,000 square feet, per Time.com.
Laura Bruce, 25, from Calgary, has owned her townhome in southern Calgary for two years, stating the process of finding her humble abode was “a lot of leg work” since Bruce and her fiancé Ryan Nephew didn’t hire a REALTOR® and had ended up going with a new build.
“The building process was easy once we had chosen. We found getting approved for a mortgage very easy. It was not until later we discovered sites like NewHomeListingService.com that makes it so much easier to find all of the Builders of new homes in one place.”
Bruce never faced any challenges in buying. “We found getting approved for a mortgage an easy process.”
A new poll by CIBC suggests home ownership is just as important to millennials as it is to most Canadians.
The survey shows 86 per cent of millennials view home ownership as important even though 42 per cent of them are renting and 21 per cent live with their parents. Overall, according to the poll, 85 per cent of Canadians consider home ownership a priority.
Of those, 63 per cent say it makes financial sense to build equity and save for retirement while 59 per cent of millennials in the 18-34 age group say home ownership provides a sense of personal freedom. Conversely, 15 per cent of Canadians say home ownership is not important, with nearly half saying it’s too big of a financial burden.
“We were keen to buy a house, as it’s a smart investment and wanted to build our own equity rather than pay rent,” Bruce said.
When asked if buying in your mid-twenties in 2016 is easier than it was 1996, she says it depends on challenges faced – there could be many factors.
“I think it’s harder as your purchasing power is less than it was 20 years ago, however, with lower mortgage rates and less down payment required it may make it easier for homebuyers now.”
Barry Gollom, vice president of mortgages and lending at CIBC, says it’s a myth that millennials don’t want to own their own home, per Huffington Post.
“In fact, our poll suggests that millennials place as much importance on being a home owner as Canadians in other age groups,” he said.
“Home ownership is an important milestone to many, and that hasn’t changed even though it has become increasingly difficult to get into the market.”
What is a Millennial: Millennials, also known as Generation Y or the Net Generation, are the demographic cohort that directly follows Generation X. Howe and Strauss define the Millennial cohort as consisting of individuals born between 1982 and 2004. (Source: http://whatis.techtarget.com/definition/millennials-millennial-generation)
Adrianna Thebault is the Marketing Communications Manager at NewHomeListingService.com, “The Most Trusted Newly Built Home Directory in Canada”