When will we stop believing some of the common myths being attributed to the home buying behavior of Millennials? It's easy to work with Millennial buyers when understanding their specific needs and that they often want what other groups of homebuyers desire, such as convenient methods of communication and to easily get information on a property.
What are the Millennial Myths? Learn the truth about what Millennials want when it comes to home buying today.
Myth #1: Millennials Have No Desire to Buy
Some may still believe that Millennials want to rent and are not interested in buying. However, survey findings demonstrate that Millennials do have significant interest in purchasing when they consider all of the benefits that come along with homeownership, such as more control over living space and additional privacy. Millennials do have the ability to appreciate the long-term value of purchasing a home and will do so after a period of refection and thought.
Myth #2: Millennials Can't Afford to Buy
Millennials simply don't have enough savings or too much debt to buy a home. Or do they? Though Millennials may have higher than average student debt, this doesn't necessarily mean they won't qualify for a mortgage. They may have enough income and/or savings to make up the difference in what student loans—other other debt—Millennials may have.
Real estate agents and sellers understand that stricter credit standards and lender requirements that came into effect after the housing crash may make it harder for potential Millennial buyers to qualify for a mortgage loan. But that doesn't mean they won't qualify for a mortgage. Though they may need to pay down existing debt or improve their credit rating (which can take more time and effort), Millennials can qualify for a mortgage with the same effort as other generations.
Myth #3: Millennials Want to See & Do Everything Online
Digital integration and having more information accessible online are impacting behaviors of the majority of home buyers. People are online using mobile phones and apps to get informed and contact necessary parties. However, this online only activity does not necessarily mean that Millennials will not call or meet in person. Some studies note that, when contacting an agent, Millennials may often be asking more specific questions about the property, finding it reduces stress to use technology to get their basic questions answered.
The Reality for Millennials
In the past few years millennial home buying trends have taken a bit of a dive for a number of reasons according to a survey by Angus Reid for the Canadian Imperial Bank of Commerce. Only about 35 percent of Canadian millennials aged 18-34 own their homes, and almost 80 percent of homeowners responding to the survey stated that they plan to sell in the next five years.
With so many millennials claiming to dream of homeownership, why aren’t they buying homes, and why do current owners want to sell? Here are a few current issues that may explain why.
- Two-thirds of current owners plan to sell because of the high cost of maintenance, taxes and mortgage payments.
- Owners with variable-rate mortgages are seeing increasing interest rates, making mortgage payments obligations more challenging.
- Market prices are rising across Canada for real estate in certain provinces and locales.
- New mortgage qualifying rules set into effect in 2018 can make even borrowers with a 20 percent down payment or more can find themselves facing ‘stress tests’ or having to pay for mortgage insurance.
- Many millennials fear selling now due to the high-priced ‘hot market’ currently in many areas that may make buying another home impossible or unlikely.
Whether these trends will change soon is hard to predict. However, marketwise prices seem to be balancing out overall meaning that there’s not a high risk of any type of housing bubble bust coming any time soon.
Though there are multiple factors affecting when Millennials may buy a North East Calgary home, that doesn't mean they can't or won't. Millennials are getting older and will, more than likely, start looking and buying homes in the numbers and percentages that former generations have done.