Reaching millennial age is a time when many are thinking about buying a house, and it is typically the right stage in life to consider home ownership. With university complete, careers are starting to fall into place, for many millennial-aged individuals are with a partner and considering marriage. Buying a house is the piece that is missing from the puzzle, due to higher costs of housing, overextended budgets, and mortgage stress test demands.
Since introducing the reframed mortgage laws in January of this year, a recent study has shown that millennials have seen their home buying budgets shrink by 16 percent, or just over $40,000. This means $40,000 less that buyers can use towards a house when choosing their price point, as a result of having to put down a larger down payment and meet stress test parameters.
While we have a large sector of the population who would be typically ready to buy, a lot of millennials are not entering the housing market at all. Alternatively, they are choosing to wait on the sidelines for longer, hoping for a decrease in price or waiting until they are in a better position to start house hunting.
Many aren’t willing to wait it out and are also not staying in the area. Instead of searching for housing in the Toronto and greater Toronto area, some millennials are opting to leave the GTA to find more affordable housing elsewhere. This makes it more difficult when it comes to things like amenities and convenience or when it comes to work commute times, but it bodes well in finding more affordable housing. Some are taking it further, going very far afield, leaving Ontario altogether and opting for the cheaper housing prices in areas such as Halifax, Nova Scotia and Moncton, New Brunswick.
While it’s a shame to lose many of Ontario’s prime working-age residents, most millennials are doing what they have to do in order to successfully navigate the next stage of their life. With no predictions of housing prices turning down soon, this pattern might grow increasingly common.