TORONTO, ONTARIO--(Marketwired - Apr 26, 2016) - Canadian housing prices continue to rise, but prospective millennial first time home buyers are in no rush to enter the market. According to a new report released today by BMO Bank of Montreal, while 60 per cent of millennials surveyed are tired of paying rent, 70 per cent would rather delay home ownership until they can get what they really want in a home.
This comes at a time when millennials are expecting to pay more for their first homes than previous years, exceeding $350,000 on average nationally. That figure rises to more than $465,000 and $525,000 for Toronto and Vancouver respectively.
The Millennial Mindset
The report, conducted by Pollara, revealed that almost all millennials (89 per cent) agree that there is value in home ownership, but are willing to defer the decision to own until it is personally right for them. Three-quarters of those surveyed shared that they don't feel pressured to buy sooner (73 per cent).
More millennials view buying a home in terms of making an investment decision rather than achieving an important milestone (66 per cent compared to 55 per cent). It's no wonder then, that many worry about making that investment only to find something wrong with the home they've purchased (78 per cent), or to experience a drop in the value of their property (66 per cent).
"Our young clientele are savvy and mindful of how their investments will grow, and this holds true when it comes to real estate," said Damon Knights, Director of Home Financing, BMO Bank of Montreal. "More than the intangibles, the return on a home purchase is important to millennials and they take a thoughtful approach to how their home will fare in the current housing market. These are all areas where a mortgage specialist can help guide them through."
Mr. Knights added that even though millennials do not feel pressured to buy immediately, two thirds acknowledge the potential to build equity that home ownership offers (66 per cent). If the goal of prospective millennial buyers is to see quick increases in a property's value, postponing could actually affect their ability to afford a home independently if the market continues on the upward trajectory they're hoping for.
The Missing Milestone
Only one-quarter of millennials surveyed (26 per cent) identify as very likely to buy within the next year. Two thirds (66 per cent) indicate that other priorities or goals outweigh their desire to own a home:
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42% prioritize travelling, going back to school or starting a business;
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38% are reluctant to be left with no disposable income if they purchase a home;
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31% are still unsure where they'd like to settle down, and the same percentage lists 'paying off debt' as a higher priority.